April 21, 2016 By

Editor


Years of seeking redress are coming to an end after the Guyana Revenue Authority (GRA) reportedly admitted that indeed, pharmaceutical manufacturing companies using extra neutral alcohol or neutral spirits are victims of paying a tax that was never intended for them on the purchase of the alcohol substrate.
After an article appearing in Guyana Times on April 15 detailed reasons why these companies are being wrongfully charged the Excise Tax, a meeting was arranged between the tax body and company representatives to discuss the matter.
Guyana Times understands that during the discussions, the GRA admitted that the two major pharmaceutical manufacturing companies – New Guyana Pharmaceutical Company Inc (NEW GPC INC) and Twins Manufacturing Chemists, are victims of a tax not intended for them.
Moves are currently afoot to rectify the situation.
According to the Excise Tax Act 2005, the tax should have only been charged on alcoholic beverages, tobacco products, petroleum products, and motor vehicles.
However, since pharmaceutical manufacturers purchased alcohol of a particular category, they have been paying taxes for all those years despite the fact that they were not involved in the production of alcohol for consumption. That is, “alcoholic beverages”.
Twins Manufacturing Chemists had explained to this publication that since the implementation of the Excise Tax, they have been lobbying but to no avail, or at the very least, an explanation for the inconsistency with what is stipulated in the Act and what is being practiced.
“Since 2007, we’ve been behind this… the issue is the Excise Tax, it ought to be removed for local manufacturers who are not producing alcoholic beverages,” a company official had said, noting that they never received a single response.
The company official had argued that the Excise Tax Act 2005 was not applicable to pharmaceutical manufacturers.
“People who are not manufacturing spirits and other alcoholic products, the category Twins and NEW GPC falls into, they are not using these alcohols to make spirits and alcoholic beverages, we are using it to make medicine, we should not have to a pay the Excise Tax, that is our position on the whole matter,” he had stated. As one analyst quipped, a “sin tax” was being applied to a “virtue product”
Last year, several manufacturing companies expressed concern over the alarmingly high Excise Tax charged on the neutral spirits they would usually purchase from Demerara Distillers Limited (DDL) and had consequently requested the Government’s intervention to alleviate the burden plaguing the local manufacturing sector.
Instead of getting relief from paying the 40 per cent in Excise Tax, manufactures were then forced to pay an incredulous 65 per cent in Excise Tax for the neutral spirits they buy locally for use in the production of their goods and services.
The alcohol purchased by manufacturers is referred to as extra-neutral alcohol or neutral spirits and is measured in Litres of Pure Alcohol (LPA). At the purchase strength of 96 per cent alcohol v/v (volume-volume percentage), it is considered only suitable for industrial use or further processing.
Efforts to contact the GRA and Business Minister Dominic Gaskin for an official comment on the matter proved futile as all calls to their phones went unanswered.