PUTRAJAYA, March 4 — An ongoing disagreement between the Customs Department and industry players had necessitated the revision of the alcohol tax structure, said Deputy Finance Minister Datuk Chua Tee Yong. 

He said there were 15 different categories in the previous tax structure and it caused confusion. 

“The government had looked into reforming the tax structure, and as such we now only have five categories which meets the objective of simplifying tax where alcohol is concerned,” he told reporters at a press conference here yesterday.

Chua said the long standing dispute between industry players and the Customs Department was due to the previous tax structure, with regards to whether certain portions of production costs and expenditure should or should not be included in the amount of duty to be committed.

“What has happened now is the duty will be based on the alcohol content and type of liquor. Alcohol content for beer is much lesser than wine, and this is what we term as an adjustment that we have to do. 

“It is not an exercise to increase the percentage of tax for liquor. If it is, there should be an increase across the board. What we are having now is an increase and decrease in tax for some alcohol beverages because of the way of the calculation, and also the format of the alcohol content and litre charge,” he said.

Chua pointed out there had been no actual revision for alcohol excise duty for almost 10 years as the last revision was done in 2006.  

“As such, this is actually more of a tax reform exercise that has some implications in terms of pricing but not across the board.

“The new prices will see an increase and decrease in prices of between five to 10 per cent depending on the calculation, categories of products, and whether the industry players will absorb some of the cost or pass it on,” he said.

He assured the price increase would not be as high as 20 per cent, as previously speculated by certain quarters. 

With regards to the projected increase of illicit and unregulated alcohol due to the tax revision, Chua said the Customs Department would have to step up their efforts especially in terms of enforcement to curb such illegal activities. 

“Industry players will acknowledge that last year there were a lot of joint co-operations between the Customs Department and them, and this contributed to an increase in market share for the industry players,” he said.

Chua also said it was difficult to gauge the impact of the tax revision on the food and beverage as well as tourism industries. He mentioned that the increase was not substantial, so it would not adversely affect or impact both industries as the projected price increase was still within an acceptable range.