Habesha Breweries, one of Ethiopia's leading beer producers, has warned that a 40% excise tax and new digital tax stamp will exert significant financial and employment pressure on the company. The tax, applied at the factory gate, will compel payments to the government without corresponding revenue gains. This measure poses broader risks to the industry amid rising costs.
Habesha Breweries, a key player in Ethiopia's beer industry, has highlighted the severe repercussions of a 40% excise tax hike and the introduction of a digital excise tax stamp system. Applied to the factory gate price, this tax will require the company to remit substantial funds to the government even before selling its products, straining finances without revenue offset.
The digital stamp initiative alone is projected to incur 372.3 million USD in costs over the next five years, with 223 million USD allocated to workforce expansion amid the company's constraints and the need for external raw materials. Such expenses do not readily translate to higher selling prices, complicating operations.
"This system may aim to streamline tax administration, but the associated costs undermine the industry's capacity," stated industry experts. Beyond economics, the beer sector grapples with social and political pressures. Government efforts to combat alcoholism through campaigns have prompted stricter measures, including bans on alcohol advertising in media and public spaces. This restricts companies from promoting new products or brands openly, pushing them toward costlier, low-key marketing strategies.
Market expansion faces hurdles, as traditional outlets serving tej, tella, and areqe—beverages exempt from excise taxes and sold at low prices—erode the affordability of factory beer.
