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

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Four hundred seats?

Four hundred seats?

The mix of divisive cultural politics and grow­th-oriented economics that feeds Hindu middle-class ambition and provides targeted welfare are key ingredients in the BJP’s political trajectory.

Editorial

Weathering the storm
Updated 29 Apr, 2024

Weathering the storm

Let 2024 be the year when we all proactively ensure that our communities are safeguarded and that the future is secure against the inevitable next storm.
Afghan repatriation
29 Apr, 2024

Afghan repatriation

COMPARED to the roughshod manner in which the caretaker set-up dealt with the issue, the elected government seems a...
Trying harder
29 Apr, 2024

Trying harder

IT is a relief that Pakistan managed to salvage some pride. Pakistan had taken the lead, then fell behind before...
Return to the helm
Updated 28 Apr, 2024

Return to the helm

With Nawaz Sharif as PML-N president, will we see more grievances being aired?
Unvaxxed & vulnerable
Updated 28 Apr, 2024

Unvaxxed & vulnerable

Even deadly mosquito-borne illnesses like dengue and malaria have vaccines, but they are virtually unheard of in Pakistan.
Gaza’s hell
Updated 28 Apr, 2024

Gaza’s hell

Perhaps Western ‘statesmen’ may moderate their policies if a significant percentage of voters punish them at the ballot box.