…DEMTOCO hails GRA’s excise tax stamp initiative
…says playing field now level
DEMERARA Tobacco (DEMTOCO) said the robust implementation and enforcement of the tax stamp project instituted by the Guyana Revenue Authority (GRA) has allowed for fairer competition among industry players locally.
Through the Customs, Excise and Trade Operations, the GRA’s Excise Tax Stamp is placed on imported alcohol (excluding beer) and tobacco products with a special barcode feature to allow enforcement officers to easily detect illicit products for which taxes were not paid.
“This measure has certainly gone a far way towards ensuring a level playing field across the industry, and the GRA and its management must be commended for their commitment towards ensuring equity and dealing with the increasing illicit trading in cigarettes,” DEMTOCO Chairman, Marcus Steele, told shareholders during the company’s 85th Annual General Meeting at the Pegasus Hotel on Thursday.
DEMTOCO, a subsidiary of British American Tobacco, recorded a profit before tax of $2.9B, representing an increase of 14.4 per cent over the previous year, and the highest growth in profits for the company in five years. According to the Chairman of DEMTOCO, the level playfield is among contributing factors to the growth in profit despite a number of challenges.
“These exceptional results can be credited to solid and transformative leadership, a high performing and motivated team, stringent and superior internal cost-based management, and the strengthening of key business partnerships, with a strong focus on increased efficiencies,” Steele told the shareholders.
He noted that the company, in 2018, was able to reduce its overhead costs by 14.8 per cent while earning per shares increased by 16.3 per cent when compared to 2017.
Steele noted that close to the end of November 2018, the government made another change to the excise structure to complement the Excise Tax Stamp system.
“This too, no doubt, redounded to an even more level playing field across the industry. We will continue to work closely with the authorities, because as a responsible business, and a major contributor to government revenues through taxes, we will always adhere to, and support, good corporate governance, and best practices in the management of the local tobacco industry,” the chairman assured.
According to him, the illicit trade in cigarettes remains a problem. He said it continues to be a problem not only to the legal tobacco industry, but also affects the collection of revenues for the State. “The struggle is to prevent smuggling, tax duty and excise evasion and the introduction of cigarettes into the local industry that do not comply with the labelling and packaging requirements of Guyana. These cigarettes do not pay what is due to the nation in the form of excise and duties,” Steele explained.
Regardless of the challenges, he said DEMTOCO remains in support of regulators, government and international organisations such as the World Customs Organisation, the World Trade Organisation, the World Health Organisation and the European Union, in seeking to eliminate all forms of the illicit tobacco trade. He said DEMTOCO is also supportive of efforts to strengthen border controls and the enforcement of laws to fight the black market.
“Again, we are encouraged by the steps taken by the GRA to address these issues, and we anticipate the continued execution of an even more robust strategy of enforcement in this regard,” Steele said.
He told the shareholders that DEMTOCO remains a vibrant force in the Tobacco Industry because of its people. In 2018, DEMTOCO’s Board appointed Christopher Brow Chairman of the company. According to Steele, since taking the office, Brown has demonstrated a clear ability to identify the challenges faced and lead the necessary responses.
According to the Chairman, DEMTOCO looks to the future with confidence, noting that despite “political uncertainty,” wider economic intelligence forecasts strong growth. “We will continue to build momentum as we support regulators, the government and international organisations in the establishment of workable tax regimes and economic policies which attack the illicit trade,” Steele said.
He noted too that the company will continue to comply with the Tobacco Control Legislation which mandates certain labels and a particular style of packaging that highlights the negative effects of smoking tobacco.