Portugal: Beer sector criticises proposed tax hike

Portugal’s beer sector has criticised the Government's proposal for the 2023 State Budget (OE2023), noting that the 4% increase in special taxes on beer compared to wine is "unfair and discriminatory", the Portugal News reported on October 25.

In a statement released on October 25, Francisco Gírio, the secretary general of APCV -- Cervejeiros de Portugal, said that "the increase in this tax is unfair and discriminatory because it increases the tax burden of beer compared to wine, which has a zero IEC/IABA tax rate." [Excise Tax/Alcoholic Beverage Tax]. Both compete in the domestic liquor market, but beer pays IEC/IABA and 23% VAT, wine pays no IEC/IABA and pays only 13% VAT.

According to the association, "Portuguese microbreweries will pay more than double the taxes per hectolitre than a large Spanish brewer pays".

In the same note, the entity said that this possibility provided for in the OE2023 "will have a 'serious' impact on the competitiveness and survival of the beer sector, its companies and consumers".

"If the proposal is approved in the Assembly of the Republic, the brewing sector will be greatly harmed compared to its two biggest competitors, wine and beer from Spain, and beer prices in Portugal could increase, as more costs could be passed on to consumers", warned the association.

According to the entity, external competition is worsening the situation. "In Spain, Portugal's main competitive market in the field of beers, the similar tax paid is less than half of the rate provided for in the proposal presented by the Government", noting that "while in Portugal the IEC/IABA on beer is 21.10 euros/hectolitre, in Spain it is, since 2005, only 9.96 euros/hectolitre".

"Aggravating this tax when Spain keeps it frozen is putting Portuguese producers in an even more deficit situation in the face of Spanish competition", said the same official, noting that "in relation to national wine companies, and in relation to Spanish breweries" this is "probably, the only national industry with tax increases every year".

Thus, "the national brewing sector demands from the Portuguese State a medium-term fiscal stability pact and access to lower rates of special tax for artisanal brewers, up to a given limit of annual production", indicated the association.

27 October, 2022