Pakistan's Premier Multilingual News Agency

Pakistan’s beverage industry opposes sugar tax

Pepsi and Coke have written a letter rejecting the increase in federal excise duty which has risen by 4%.

Islamabad, 3 February 2023 (GNP): Pepsi and Coke recently met with the Finance Ministry of Pakistan and promised to get loans worth about $200 million from their parent businesses to inject money into the nation. The Finance Ministry agreed that they can only use the dollars they brought into the nation to acquire the necessary machinery, tools, and components for the ‘concentration.’

However, in a separate letter, both companies informed the Prime Minister that the planned 4% FED (federal excise duty, also known as sugar tax) on beverages was unjust because it solely applied to the sector of carbonated drinks known as aerated waters and that it will also increase prices.

The letter read: “The combined taxes were high as 30 percent, including sales tax and FED, and it was the only industry within the food and beverage (F&B) sector paying the FED. Further implementing the sugar tax on top of high FED will lead to double taxation and towards a total collapse of the legitimate taxpaying manufacturers in the beverage industry.”

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The two businesses have noted that for local manufacturing to survive, if not prosper, Pakistan needs a tax regime that supports it. To account for the exceptional increase in critical raw material prices, rising inflation, and supply chain disruptions, the companies have urged that FED be maintained at its present rate of 13 percent in order for the industry to continue to generate sustained growth.