ISLAMABAD: The beverage industry has warned the Federal Board of Revenue (FBR) that the proposed four per cent federal excise duty (FED) dubbed as sugar tax would not only push up prices but would also hit $200 million investments plan by two key carbonated soft-drink companies.

In a recent meeting with the finance ministry, Pepsi and Coke have assured that they will obtain loans worth around $200 million from their parent companies to bring dollars into the country.

The finance ministry has agreed that their imports of key parts, equipment as well as components for the “concentrate” can only be made from dollars that they bring into the country.

At the same time the two companies have written a joint letter to the prime minister informing him that the proposed 4pc FED on beverages was unfair as it was being levied only upon the carbonated drinks termed the aerated waters industry.

The two companies have observed that Pakistan needs a tax policy that encourages local manufacturing to survive, if not thrive.

“The combined taxes were high as 30 per cent, including sales tax and FED, and it was the only industry within the food and beverage (F&B) sector paying the FED,” the letter added.

Both Pepsi and Coke said that it was the only industry among various water-consuming industries paying “water charges” and the only industry within F&B sector, where the imposition of a health levy has been suggested.

“Further implementing the sugar tax on top of high FED will lead to double taxation and towards a total collapse of the legitimate taxpaying manufacturers in the beverage industry,” the companies have said.

The companies have demanded that for the industry to continue to deliver sustained growth, FED must be maintained at its current rate of 13pc, to make accommodations for the unprecedented hike in key raw material, high inflation and supply chain disruptions.

Published in Dawn, February 3rd, 2023