San Miguel out to stop 'unfair' tax
HONG KONG'S biggest brewery, San Miguel, says it is willing to sacrifice millions of dollars in return for the suspension of a new alcohol duty system it claims gives an unfair advantage to importers.
The new system has been temporarily in place since March but a proper bill will be placed before the Legislative Council soon.
The system was designed to be simpler and reduce the amount of duty paid on beer.
But it has been the subject of discussion between the Government, San Miguel and Carlsberg since it was announced in this year's Budget.
The Government claims the local breweries are misinterpreting the system so they pay less than the required amount of duty. The breweries say the new system, which replaced a flat rate with a percentage of taxable value, needs clarification.
In the meantime, a compromise amount has been reached.
San Miguel managing director Stuart McGregor said yesterday he would gladly pay the old flat-rate system while difficulties with the new scheme were ironed out.
''It would be sensible to go back to the old system while we work this out properly,'' he said.
He admitted it would cost the brewery money because the old system drew more duty.
''We would gladly pay more,'' he said. ''What we are interested in is to be able to compete with importers.'' He said the old scheme treated local brewers and exporters equally because they each paid a flat rate on the volume sold.
But under the new method of payment, 30 per cent of the taxable value of the beer sold is paid.
Mr McGregor said local breweries would be paying more duty because, unlike importers, elements of sales and promotion, distribution, administration and profit increased were included in the taxable value.
He said it would give importers an unfair advantage in the market.