In Colombia, beer pays 51% of the taxes; one of the highest taxes worldwide, as explained by Bavaria in its Press Release, where it sets its corporate position regarding the mentioned VAT increase on beer.
Beer currently pays 11% VAT and not 3% as most public opinion sectors believe, in a tax comprised of a non-deductible 8% for the Departmental Health Secretariats and the District Capital, and 3% for the general State budget.
This public announcement is made through the following Official Communication:
With respect to the announcement of the President of the Republic, to the extent that there is no reason for beer to be applied a VAT below the general rate of 16%, Bavaria hereby informs the following to the public opinion:
- At present, beer is levied with 51% tax, out of which 40% corresponds to excise tax and the remaining 11% to VAT, broken down as follows: non-deductible 8% for the Departmental Health Secretariats and the District Capital, and 3% for the general State budget. Beer is an excessively levied product in Colombia, based on international standards.
- Bavaria, in average, contributes 33% of the total tax revenues in the provincial departments, as well as 3.4% of the total State taxes, thus contributing with a share equivalent to seven times its size in economy, based on Fedesarrollo.
- The VAT increase announced of five points within the framework of the decree that declared the social emergency state would imply a 56% tax to beer, one of the highest worldwide, and such increase would negatively affect the business in its complete value chain. All vendors, distributors and establishments where beer is sold in the country will be affected, as well as the consumers, who have already faced recently very difficult times due to recession.
Due to the above, and even though we understand the difficult situation of the health sector, Bavaria expects the Government to make a reasonable decision in this situation, as it has publicly ensured.
1. Article 475 of the Tax Statute, amended through Article 60 of the 2003 Law 863. Likewise, ruling of the Constitutional Court C-776/03 of September 9th, 2003.
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Press Release
19 JANUARY 2010
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