Bukit Damansara, 31 August 2018 – Sales and Services Tax (SST) for cigarettes has been gazetted at 10% as of 29 August 2018 and as a result will require BAT cigarette prices to increase.
Erik Stoel, Managing Director of BATM commented: “We are concerned about the impact that the 10% increase of SST will have on the legal cigarette industry given the high incidence of illegal cigarettes (close to 60% of total consumption). In light of these high levels of illegal cigarette trade and the persistent pressure on disposable income for the average Malaysian consumer, we have urged the Government to re-consider an SST increase on tobacco. For the tobacco industry a sales tax of 10% is higher than the previous 6% GST. Furthermore, this implies a double taxation as the SST will be levied inclusive of the high levels of excise, which we currently contribute to the Government. Unfortunately, this will leave us no other choice but to consider an increase of the consumer price to reduce the estimated negative impact on our business performance and to compensate for the differential in tax between SST and GST. We are concerned that this could further fuel the growth of illegal trade in Malaysia.”
“The legal cigarette industry is under tremendous pressure and has never recovered from the unprecedented excise tax hike of close to 40% way back in November 2015 which increased cigarette prices to the existing high prices compared to illegal cigarettes. As a consequence, it’s a known fact that the legal volumes have declined significantly and has made Malaysia a very attractive hunting ground for smugglers and all sorts of criminal elements that should not be associated with a respectable ‘new Malaysia’.”
“Since the significant 2015 excise increase, the industry has made conscious efforts not to pass on inflationary cost and other cost associated to adhere to tobacco regulations in Malaysia and to prevent putting further pressure on consumer affordability. Now as a result of the tax increase we are required by law to revise our cigarette prices.”
“This price increase will result in higher disparity between legal and illegal cigarette prices, in absence of any effective government solutions to curb illegal cigarette trade in Malaysia. Like all Malaysian citizens we were encouraged by our new Government’s manifesto, including clear commitments to address illegal cigarettes and corruption in the system. Based upon this promise we urge the Government to put in place rapid and drastic interventions to address this massive national issue.”
About British American Tobacco (Malaysia) Berhad
British American Tobacco (Malaysia) Berhad (British American Tobacco Malaysia) British American Tobacco Malaysia is the leading tobacco company in Malaysia. British American Tobacco Malaysia markets high quality tobacco products designed to meet diverse consumer preferences. Our portfolio includes world- famous brands like DUNHILL, KENT, PETER STUYVESANT, PALL MALL and ROTHMANS.
British American Tobacco Malaysia employs 497 employees who are involved in a wide spectrum of disciplines, from generating insights, developing brands and making these available on a national level. In addition, we also set leading edge talent development practices as well as ensure a strong foundation of corporate governance and shareholder relations.
British American Tobacco Malaysia is part of the British American Tobacco group, which is the world’s most international tobacco group and the second largest stock market listed tobacco group by global market share.
For more information, please contact British American Tobacco Malaysia:
Fairuz Helmi, Head of External Affairs at 03-27208188 or Fairuz_Helmi@bat.com
Prianka Krishnamurthy, External Affairs Manager at 03-27208147 or Prianka_Krishnamurthy@bat.com