The clash over excise duties within the local alcohol production sector in Albania has opened the ground for a significant legal battle, with the Association of Producers and Traders of Domestic Alcoholic Beverages at the forefront of the debate.
Their appeal to the Constitutional Court sheds light on the negative effects of the current tax regime on domestic production, particularly in relation to the excise duty on beer.
The association’s call for a partial repeal of the excise law stems from concerns about stunted growth opportunities for local companies. Targeting the excise band of 200,000 hectoliters, they argue that the existing tax structure acts as a barrier to expansion, leading to increased tax burdens and a higher risk of tax evasion.
Amid claims of a 7% reduction in domestic production of alcoholic beverages within the companies represented by the association, the alleged benefits of an additional 260 million lek ($2.6 million) from the excise tax pale in comparison to the negative consequences. A 12% fall in the number of employees and reductions in profit tax and VAT from domestic revenue underline the wider and negative impacts felt across the sector.
Furthermore, the disparity in excise duty levels between Albania and the EU, as highlighted by the Beer Society, underlines an urgent need for harmonization with European standards. The failure to harmonize tax rates since 2012 raises industry concerns and highlights the urgency for equitable tax practices.
As the discussions continue, the imminent decision of the Constitutional Court has major implications for the alcohol industry in Albania. Beyond the immediate sectoral effects, potential changes in consumption patterns may reverberate across related industries, particularly in the glass bottle manufacturing sector. Increased alcohol consumption may catalyze increased demand for glass bottles, prompting processors and manufacturers to consider strategic investments to expand their capacity.
In a broader context, the intersection between excise duty, domestic alcohol production and the glass industry reveals a complex web of dependencies and outcomes. A favorable decision by the court could pave the way for a more stable and growth-oriented industry landscape, benefiting stakeholders in many sectors but directly impacting that of glass.
In summary, the ongoing discourse on excise duties in Albania requires a nuanced approach that balances industry growth with competitive tax policies. The court’s upcoming decision stands as a pivotal moment in determining the course of the domestic spirits sector and its ancillary industries, shedding light on the complex dynamics shaping Albania’s economic landscape.
Source: GlassBalkan
