Adopt carton packaging of opaque beer to seal tax and income loss loopholes, brewers urged

ZAMBIA has a proud, healthy and thriving opaque beer market with many producers making it available in bulk, carton or plastic. According to official figures, there are more than 48 registered opaque beer breweries in Zambia.

With the growing wave of unhealthy bulk distribution, anti-plastic sentiment and carton’s legitimate price and environmental benefits over other packaging methods, the time is perfect to re-educate the entire supply chain, from government to consumer, on why carton should be the pack of choice in the opaque beer beverage market.

Adoption of carton packaging for opaque beer is not only good for the environment but also ensures accurate measurement for regulation and collection of excise duty.

This statement follows a recent announcement by Minister of Finance proposing to increase excise duty on opaque beer from 15 ngwee to 50 ngwee per litre (packaged) and to K1.00 per litre (bulk) to control and regulate the traditional beer industry.

If implemented, the new tax law is likely to swing consumers and breweries away from bulk and back to carton, create a legitimate demand and preference for carton, and ultimately increase tax compliance levels by ensuring taxes due are captured and paid accordingly. Zambia Revenue Authority has been an advocate of carton packaging for opaque beer as it allows for accurate measurement and quantifying of product and sales for tax purposes.

The current reality on the ground is that bulk and illicit brews are prevalent as breweries continue packaging and distributing their product in drums encouraging irresponsible drinking resulting in severe loss of tax revenue to Government.

Despite Statutory Instrument No. 72 of 2012 – “the Liquor Licensing (Intoxicating Liquor) (Quantities and Packaging) Regulation, 2012” – banning the production, transport and sale of alcohol in bulk containers, the practice remains rampant across the country due to less or selective enforcement of the law.

In a recent interview with the media, National Breweries noted that there has been an influx of illegal bulk sales of opaque beer. The illegal sales are estimated to have increased from 3.8 million hectolitres last year to 4.5 million hectolitres this year.

According to a 2018 report by Euromonitor dubbed Size and Shape of the Global Illicit Alcohol market, Zambia loses upto $145 million annually in unpaid taxes from illicit alcohol.