26 April 2018

Mozambique: Producers Warn Against Fiscal Stamps On Beer

Maputo — The producers and importers of alcoholic drinks have warned that plans by the Mozambican Tax Authority (AT) to impose fiscal stamps on beer will backfire and result in less tax, not more, being collected.

A ministerial diploma of 2016 made it obligatory to place fiscal stamps on tobacco products and alcoholic drinks. Since then the stamps have been introduced successfully on cigarette packets and on wines and spirits.

Putting stamps on cans and bottles of beer is much more challenging. At a Maputo press conference on Wednesday, the Association of Drinks Producers and Importers (ABIBA) warned that, if the measure goes ahead, taxes raised from beer could collapse from the current eight billion meticais (about 132 million US dollars) a year to five billion meticais. That would be an annual loss to the exchequer of over 49 million dollars.

The chairperson for the beers sector of ABIBA, Neyde Pires, said that adding fiscal stamps puts a heavy technical burden on beer producers.

Furthermore, the process of adding fiscal stamps is an additional cost for beer producers. That cost would be passed on to consumers, who might react by buying less beer. If less beer was sold, the breweries would inevitably lay off some of their workers.

ABIBA is in favour of fiscal stamps on wines and spirits, since this is the sector that used to be dominated by contraband. With the introduction of the fiscal stamp, it has become easy to spot smuggled wines and spirits.

But the beer consumed in Mozambique is mostly produced inside the country by one company, CDM (Beers of Mozambique). It is estimated that only about five per cent of the beer drunk in Mozambique is contraband. CDM is one of the country's largest taxpayers, and nobody has ever accused it of tax evasion.

“Very few countries in the world put fiscal stamps on beer”, said Pires. At a press conference last year, CDM said there are only four countries that bother to put fiscal stamps on beer, all of them moslem-majority nations.

At that press conference CDM warned that adding a fiscal stamp would slow down the bottling process, thus reducing production. Subsequently the AT claimed the stamps could be added digitally, but it is not at all clear how this would work.

The process of adding fiscal stamps has been farmed out to the British company Opsec, which claims to be a “global leader in government identification and asset protection, including tax stamp solutions, bank note security, and identification systems”.

ABIBA says that Opsec has no experience in adding tax stamps to beer, and that tests it has undertaken, in Mozambique and South Africa, were unsuccessful.

The AT immediately held a press conference to reply to ABIBA, where Miguel Nhane, the general coordinator of the fiscal stamp procedures, insisted that a digital stamp would meet ABIBA's concerns.

He said there is no reason for a war of words between ABIBA and the AT, since the two institutions have been holding a dialogue since the first phase of the fiscal stamps.

He thought it made no sense to predict a fall in tax revenue, and claimed that, since the introduction of fiscal stamps, tax revenues from tobacco have risen by 24 per cent, and from wine by 85 per cent.

But in both these cases, the market used to be dominated by illegal imports, which is not the case with beer.

The introduction of fiscal stamps on beer depends on a government diploma which will state exactly how it is to be done. Nhane said these regulations should be ready by June.

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