Ethiopian Bottled Water, Soft Drink, Fruit and Vegetable Manufacturing Industries Association (EBSFMIA) ask Ministry of Finance (MoF) to suspend excise tax and value added tax (vat) for the time being. In a letter the association sent to MoF stated that its members are highly affected because of the outbreak of coronavirus.
“As per our evaluation the sector particularly the bottled water business is significantly affected by the outbreak,” the letter signed by Ashenafi Merid, General Manager of EBSFMIA, states.
It added that the pandemic that follows by ceasing businesses at Hotel and restaurants has significantly dropped the sales of water bottlers business. “Cancelation of mass gathering like conference, concerts, exhibitions and other meetings and suspending day to day operations at Addis Ababa based international and continental organizations and diplomatic missions have also contributed for market slowdown,” the association explained.
According the EBSFMIA, these effects has dropped the bottled water business by up to 85 percent and that forced them made them unable to settle the dues that were supposed to be paid for the government.
In its letter copied to the Ministry of Trade and Industry and Ministry of Revenue the association asked the government to cease the excise tax payment. Besides that it demands the lifting of vat for some period, but it did not state a given period. EBSFMIA has also claimed to benefit from the loan interest rate relief and rescheduling of loan settlement period at banks. “If such decisions could not be applied the sector will be in trouble to pay wages and continue its operation,” the letter states.
Since COVID 19 imposes challenges on the economy the government has been taking several measures for vulnerable sectors. At the same time financial institutions have also applied loan settlement reschedule for almost all who demanded, while they have also cut interest rate fully or partly for some sectors like hospitality, horticulture and industry sector for a given period of time.
Meanwhile vat payment has been rescheduled by the government. In this regard EBSFMIA would be the first that demands the annulations of such kind of taxes including excise tax. The water bottling sector is responsible to collect 10 percent excise tax from sales. According to information Capital obtained from the sector, some big bottlers may pay up to five million birr per month as excise tax. Ashenafi expressed his hope that the government will come up with good response to save the sector. He told Capital that the sector has created about 50,000 jobs and rapidly growing. “At least we need some relief to alleviate this bad situation,” he added.
According to the General Manager, the partial lockdown that suspend most activities particularly mass gathering has seriously affected the sector. “Different meetings and conferences have been the major source of business for the bottled water industry that is currently fully abandoned all over the country due to COVID 19,” he says, “besides that different offices and the hospitality business are major users of bottled water but currently offices like international organizations have almost closed their offices and the business activity at entertainment areas also dropped, which directly affects us.”
He recalled that at the initial stage when COVID 19 case was reported in Ethiopia the market showed a boost because of the households, who were buying bulk of bottled water but it is now almost nil. “Households are not potential customers in the past,” he added. The association has over 80 members from over 90 water bottlers in the country.