Tanzania: Serengeti Breweries calls for more favourable tax and policy environment

Serengeti Breweries Limited (SBL) has called for creating a more favorable tax and policy environment to optimize government revenue generation and ensure the sustainability of businesses. The brewer made this appeal over the weekend at a meeting with the Parliamentary Committee for Industries, Trade and Environment, IPP Media reported on November 4.

“An unpredictable tax environment or one that is in favour of one player is a disincentive to the industry growth and government revenue generation,” said SBL Managing Director Obinna Anyalebechi, citing the current excise tax concession of 620/- per litre on beer made from local malt as one among discriminatory taxes.

The tax concession poses a 32% excise tax gap compared to beer from imported malt, which is taxed at 918/—per litre. Importing brewers also have to suffer additional costs related to paying import duty and the effects of forex fluctuations.

Only one player currently enjoys the lower excise tax on beer made from local malt leaving two other beer producers with smaller production capacities – SBL and East African Spirits Limited – in the disadvantaged position of paying the higher 918/- excise tax band. “Our small beer volume does not justify investment into a malting facility at the moment,” Obinna said urging for the creation of an intermediate excise band of 680/- per litre on beer made with 75% local content.

SBL is particularly concerned about the excessive tax imposed on imported malt. The company has urged the committee to disband this disproportionate tax structure to foster a more competitive business landscape.

SBL warned that the additional taxes could not only hinder this revenue increase but also lead to unintended consequences in the alcohol industry, such as potential price hikes and a spike in illicit beer production. The company emphasized that fostering local sourcing and agricultural support, rather than imposing higher taxes, would yield sustainable revenue growth at 71.8 billion TZS while safeguarding the industry and consumer affordability.

The Chairperson of the Committee Deodatus Mwanyika stated, “Our visit to SBL is a step forward in understanding and supporting initiatives that align with Tanzania’s broader goals for industrial and agricultural development. The insights gained from this engagement will be instrumental in driving policies that enable revenue growth, enhance local production, and improve the overall economy.”

The committee is expected to reconvene with key stakeholders on the subject matter to ensure a conducive environment for local industry development to drive Tanzania's economic transformation, helping build a self-sufficient and resilient economy.

05 November, 2024