On September 4th, Accra Brewery PLC (ABL) in the Republic of Ghana warned that the proposed beer consumption tax reform could increase the tax burden on local beer production, hinder investment, and put up to 2000 jobs in the beer value chain at risk.
The company stated that despite investments made by domestic eoe beer producers in factories, employees, supply chains, and agricultural product procurement in Ghana, the revised system may bring unexpected advantages to imported beer.
Assuming the implementation of a new consumption tax system in fiscal year 2027, Accra Beer Limited estimates that this will have a potential impact of $7.5 million on its budget.
The company stated that its impact goes far beyond its own operations and pointed out that the contribution of the Ghanaian beer industry is broader. The industry will provide 52000 job opportunities in 2023, equivalent to 0.4% of the total employment, of which approximately 98% will be created outside of breweries.
The company stated that the proposed changes to the beer consumption tax system may affect distributors, retailers, farmers, logistics suppliers, hotel and catering enterprises, as well as other businesses related to the beer value chain.
The company acknowledges the need for the government to strengthen domestic tax administration and expresses support for various efforts to build a sustainable fiscal environment.
The company stated that Dr. Atto Fosson, the Minister of Finance, had previously stated that the reform would include a review of the tiered consumption tax rates for beer and dark beer, aimed at increasing government revenue while maintaining incentives for local production.
The company calls for the existing tiered tax rates to remain unchanged for fiscal years 2026 and 2027, in order to facilitate more evidence-based consultations between the government and industry stakeholders.
The company stated that the review should consider local manufacturing and investment, the competitiveness of domestic and imported beer, employment, the correlation effects between agriculture and agricultural product processing, as well as government revenue targets.
However, the Ghanaian Ministry of Finance stated that data from the Ghana Revenue Authority shows that about 85% of the production of Accra Beer Limited and other domestic manufacturers has reached the highest preferential tax rate level.
Under the previous consumption tax system, beer and dark beer with a local raw material content exceeding 70% were subject to a consumption tax rate of 10%.
The Ghanaian Ministry of Finance stated, "The tiered incentive mechanism works by creating marginal rewards for the flow between different tax rate levels. When 85% of production has reached the highest preferential tax rate level, there are no higher levels to be promoted, and no other incentive measures to be provided
According to the revised consumption tax law, the three-level tax rate structure is retained, but the tax rate for beer and dark beer with local raw material content exceeding 70% has been increased from 10% to 25%.
The mid-range tax rate (local raw material content of 50% to 70%) has been increased from 32.5% to 40%, while the standard tax rate remains unchanged at 47.5%.
The Ghanaian Ministry of Finance stated that this consumption tax reform represents a reduction rather than cancellation of tax incentives, and pointed out that producers in the highest preferential tax rate category still enjoy a 22.5 percentage point tax advantage over imported beer.
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