Ukraine: Brewers alarmed by possible beer excises doubling

Ukraine’s beer market could fall by up to 30% in 2016 if the excise duties are doubled, Denys Khrenov, acting Director General of SUN InBev Ukraine, was quoted as saying by Interfax on December 4.

"Despite the last year increase by 42.5%, the excise duty collected in January-September 2015 fell by UAH 62 million (3.2%) year-over-year. What does it mean? The goal to replenish the budget has not been achieved," he said.

He said that in January-November 2015 the nation’s breweries produced 20% less beer than a year ago.

"The revenues from the excise duty may be larger in the beginning, but even in the medium term outlook the effect will gradually decrease, until sales decline. As for other payments, VAT, profit tax, income tax and other taxes, they will fall not only at breweries, but also throughout the whole chain – from farmers to the retail chain, eating the whole positive from the excise duty revenue," Khrenov said.

Carlsberg Ukraine is also alarmed by the draft bill aiming at sharp increase of the excise duties by 100% from January 1, 2016.

“Over the last six years – from 2008 to 2014 – Ukraine’s beer production fell by 28%, and this year the decline grew even more, being almost 25% in H1 2015 year-over-year," the company said.

Carlsberg Ukraine believes that beer producers will have to close production facilities, dismiss employees and tax payments to the national budget will fall.

According to tentative data from Obolon Corporation, total beer production may fall by 15% in 2015, to a record low of around 20 million hl.

"The Cabinet does not want to hear these arguments: this year our facilities worked at less than 40% of total capacity and in the peak months the figure did not exceed 50%, and in the off-season it was less than one third," the press service of Obolon said.

The company said that the government traditionally violates the Ukrainian legislation which bans the change of the tax rates less than six month before the start of the new fiscal year.

04 December, 2015