New draft to lower excise for domestic beer industry

TIRANA, May 3 – The approval of some changes to the excise law increasing the tax burden for the domestic beer industry has forced the Finance Ministry to make some new amendments to the excise taxes applied to local breweries. The draft law foresees to lower the excise tax for breweries with an annual production or import of 200,000 to 300,000 hectolitres to 15 lek per litre, down from 30 lek/litre currently. Meanwhile, annual production or import of more than 300,000 hectolitres will be taxed at 30 lek per litre. The decision is expected to bring a negative effect of up to 230 million lek. Data from the General Tax Directorate show VIP companies paid 584.7 million lek in excise tax in 2010, up from 508.6 million lek in 2009 from domestic beer production.
The initiative comes few days after ruling majority approved the law on excise taxes for a second time without making any changes after the President returned it for further review in Parliament two weeks ago. The law received only the majority’s 73 votes while the opposition Socialist Party walked out of Parliament.
Edmond Spaho, the chairman of the parliamentary economy committee, said the law did not violate the Stabilization and Association Agreement as the President argued when he returned the law for review.
“Apart from raising costs for the domestic industry, this law could also bring negative effects on the people employed in this industry, who could lose their jobs,” said the president in his motivation.
The regulatory changes to the law were made after the signing of a 10-year concession contract with Switzerland’s Sicpa which earlier this year won a tender to produce and establish a tax stamps control system on tobacco, alcohol and pharmaceutical products.
The business community, especially beer producers had opposed changes to the law, saying it increased costs for local breweries by at least 15 percent and endangered the domestic beer industry which has invested 80 million euros, mainly from loans taken by commercial banks.
The American Chamber of Commerce also opposed the changes to the law, saying that the changes and the concession agreement were not preceded by a discussion with representatives of the affected industries.
The set price for excise stamps or safety codes for tobacco, spirits/wine and beer at respectively 20 euros, 32 euros and 22 euros per 1,000 stamps, without including VAT and other taxes that will be paid by the taxpaying companies, means excise will increase over 10 percent.