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Monday, September 26, 2022

Alcohol gets high with VAT hike – The Morning

Must read

  • DCSL increases prices as PM raised VAT by 4%
  • New prices already in effect
  • Industry says skyrocketing raw material prices also a factor

 

 

By Imesh Ranasinghe 

Distilleries Company of Sri Lanka PLC (DCSL) has decided to increase its liquor prices to match the increase in Value Added Tax (VAT) from 8% to 12% effective from 1 June 2022.

Accordingly, a 750ml bottle of liquor has witnessed an average price increase of Rs. 500-550, while 375ml bottles are up by Rs. 250, and 180ml bottles by Rs. 130. 

On Tuesday (31), the Prime Minister’s office issued a statement on a tax hike to restore almost all the taxes that were removed or reduced in December 2019 to their previous levels, in a bid to raise revenue for the Government.

The VAT was increased by 4% to 12%, while the VAT threshold was reduced to Rs. 120 million, from Rs. 300 million per annum 

The Gazette Notification on the VAT hike was issued yesterday (1) on the import and/or supply of goods and services other than imported goods exempted previously, effective from 1 June.

Furthermore, a senior industry official told The Morning Business that the price hike is further driven by the increased cost of raw materials, infrastructure costs, operational costs, and taxes, while ethanol prices have gone up from Rs. 700-900 to Rs. 1,300-2,000.

In March this year, the price of a 750ml bottle of liquor issued under the extra special label was increased by Rs. 100, the price of a 375ml bottle of liquor by Rs. 60, and a 180ml bottle of liquor by Rs. 30, as the cost of production for the companies increased with the floating of the exchange rate.

Last month, it was revealed by the Excise Department that liquor sales in the country have declined by 40% in the first quarter of 2022 due to the increase in prices. 

However, DCSL stated it had earned a net profit of Rs 1.9 billion for the quarter ended 31 March 2022, compared to a Rs. 1.8 billion net profit in the previous quarter.

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