Japan Plans to Reduce Tax Rate for Beer, Hike Levy on Imitations

Published By : 31 Aug 2015 | Published By : QYRESEARCH

Officials within the finance ministry of Japan have been generating a buzz after making plans of reducing the tax rate on real beer at the same time increasing the rate on beer imitations.

The plan that is presently under consideration is likely to create a uniform tax amount for similar beverages and redefine beer. This is the first time in around 110 years that this will be done. 

The primary goal for this move is to create hurdles for breweries who are otherwise avoiding payment of increased taxes on beer by producing imitation drinks that do not fall under the category of beer as per the current definition. 

The focus of all efforts here is malt.

The tax paid by breweries on a 350 milliliter can of beer is US$ 0.64 or 77 yen. The tax paid on a can of happoshu of the same amount of beverage is 47 yen. Happoshu has contains less than 25 per cent of malt. Breweries pay a mere 28 yen as tax for malt free third category beer. 

To maintain the tax revenues on beer at the present level, officials of the finance ministry in Japan are looking to set up a uniform tax rate of around 55 yen for beverages that do not fall under the category of beer as per definition. This could mean higher prices for drinks such as happoshu but lesser retail price for beer. 

The finance ministry, after coordinating with the beer industry in the country as well as the ruling coalition, is mulling over the decision of including these changes in the tax law starting from the following fiscal year. 

Compared to other countries, the beer tax in Japan is much steeper. This is mainly because historically, beer has been considered to be a luxury imported item more than a hundred years ago. 
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