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ZAM  Raises Concerns Over Altered Excise Duty Valuation in 2024 National Budget

In response to the recent announcement in the 2024 National Budget speech by the Ministry of Finance and National Planning, the Zambia Association of Manufacturers (ZAM) has expressed deep concern over the proposed change in the method of excise duty valuation for spirits, liqueurs, and other spirituous beverages, emphasizing the potential risks it poses to alcoholic beverage manufacturers in the country.

In an official statement issued by Muntanga Lindunda, the Chief Executive Officer of ZAM, the association acknowledges the government’s objective to create a fair and transparent tax system for the alcoholic beverages industry, a vital sector contributing significantly to the nation’s economy, employment, and revenue generation.

Ms. Lindunda underscored the significant cost implications that the change may impose on the manufacturing sector. She pointed out that compliant manufacturing companies, which already face higher production costs, will be disproportionately affected. 

The competitive landscape, according to her, will be altered as compliant companies contend not only with non-compliant retailers but also the informal sector, illicit production, and smuggled alcoholic beverages.

The CEO expressed concerns that the alteration may diminish the competitiveness and quality of locally produced alcoholic beverages, potentially discouraging investments in expansion, new product development, innovation, value addition, and quality improvement.

Furthermore, Ms. Lindunda noted that the change could expose the industry to unfair competition from imported products priced lower than domestic products due to various factors, including subsidies, exchange rate variations, and differences in tax regimes. 

Alcoholic beverages imported from Southern African Development Community (SADC) member states, in particular, may enjoy a distinct price advantage based on different excise duty valuation methodologies.

The implications of the measure extend beyond the manufacturing sector, raising alarms about potential disruptions in the local supply chain and an upswing in illicit activities such as smuggling and the production of illegal alcohol. 

Ms. Lindunda highlighted the risks to human health due to inadequate monitoring and assessment mechanisms, potentially violating regulatory and health standards.

Despite ongoing engagements with authorities, including the Zambia Revenue Authority and the Health Department, ZAM recommends that the government reconsider the proposed change. 

The association urges comprehensive consultations with industry stakeholders, especially micro, small, and medium enterprises (MSMEs), to devise a more suitable and sustainable solution that balances government revenue objectives with the growth and survival goals of the local manufacturing sector.

In conclusion, Ms. Lindunda reiterated ZAM’s commitment to collaborating with the government and other stakeholders to foster the growth and development of the manufacturing sector, contributing to the vision of making Zambia a prosperous industrial nation. The association emphasized the belief that today’s MSMEs are the future multinational corporations (MNCs).

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