Sri Lanka court suspends liquor tax

COLOMBO (EconomyNext) – Sri Lanka’s Supreme Court Wednesday issued an interim order suspending the implementation of a new government tax of 200 million rupees on alcohol and beer manufactures.

The excise tax proposal, in the government’s interim budget on 7 February 2015, target manufacturers and retailers of alcoholic beverages to address problems of tax evasion.

It was seen as reducing the number of players and acting as a barrier to entry.

Except four big firms which dominate the market, most licensed liquor manufacturers do not produce enough to meet the minimum monthly excise tax of 200 million rupees, according to a report by Fitch Ratings.

The Supreme Court stay order came after small distillery owners objected to the new tax, claiming it would force them to close as smaller players could not afford to pay.

 

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