Business

KBL bemoans growing tax burden

Tax engine: KBL represents one of the country’s few examples of successful, long-term domestic manufacturing PIC: MORERI SEJAKGOMO Tax engine: KBL represents one of the country’s few examples of successful, long-term domestic manufacturing PIC: MORERI SEJAKGOMO
Tax engine: KBL represents one of the country’s few examples of successful, long-term domestic manufacturing PIC: MORERI SEJAKGOMO

KBL expects to pay between P1.5 billion and P1.7 billion in various taxes this year, including the costs of placing a biometric imprint or stamp on each unit of alcohol produced. The stamps are part of the BURS’ efforts to check that the correct tax revenue is being paid and that the products are genuine and not illicit.

From an initial position of 30 to 25 thebe per stamp per unit being paid by the alcohol industry, BusinessWeek by 2022 was informed that negotiations with the BURS had reduced this to a final range of between five and 15 thebe.

Speaking at a high-level business forum featuring President Duma Boko last week, KBL managing director, Carlos Bernitt, expressed concern about the growing tax burden on the company and the general industry.

“We cannot stay away from some of the challenges we have been facing in our industry such as the high levy taxes, with Botswana being the second highest in Africa in levies and amongst the top 10 in the world. “That represents about half of our costs of production. “Also there is a fiscal marking tax (BURS stamp) which is another challenge that will increase the cost of production and further increase prices as we try and cover the operational cost. “It will impact revenue collection for government and shift consumer preferences to more high alcohol content which is a challenge for us,” he told the forum.

The BURS’ 10-year contract with Texas-based authentication firm, Authentix, for the implementation of the tax stamp is due to start by September this year. A previous statement by Authentix indicated that the system was capable of marking and digitally tracking an estimated 500 million product units per year.

Bernitt said the alcohol industry was a major contributor to taxes and broader economic activity in the country.

“The alcohol industry represents about one percent of total GDP in the country and 7.5 percent of taxes,” he said.

The MD said the increasing tax burden came as KBL was stepping up its supplier development activities that are intended to procure more of its inputs from the local market. At present, the beverage company is sourcing 22% of its inputs locally, including services, with 78% imported – a value estimated at P1 billion.

“We have a programme where we first evaluate and identify areas with guidance from the Agriculture ministry and available data,” he said. “We then go and assess, do trials for harvesting, then brewing, looking at safety, quality, and the standards we need and once we have established a farming protocol. “We started some of these trials in Botswana last year but unfortunately there was a drought. “We will continue with them and we are determined to be a player in the agriculture sector to help Batswana drive the quality that the company requires in terms of different key materials.”

He added that the local programme was starting with sorghum, but would grow to include supplier development in maize, millet, and barley which are key ingredients for KBL.