Will consumers bear the full brunt of the new sales tax on alcohol and tobacco?

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Consumers to Face Full Impact of New Sales Tax on Alcohol and Tobacco

Alcohol and tobacco manufacturers have indicated that they will not absorb the newly implemented 10 per cent Sales and Services Tax (SST) on their products. Instead, companies such as Heineken Malaysia Bhd and Carlsberg Brewery Malaysia Bhd have announced plans to pass the entire tax burden onto consumers through price increases. This decision stems from the higher tax rate compared to the previous Goods and Services Tax (GST) regime.
Price Adjustments by Beverage Manufacturers

Carlsberg Malaysia, which distributes brands like Carlsberg, Asahi Super Dry, and Kronenbourg 1664, is implementing a 5.5 per cent price increase to adjust to the SST. Managing director Lars Lehmann has expressed concerns that the SST's implementation could negatively affect consumer spending on beer. He specifically highlighted the on-trade sector, such as restaurants and bars with annual revenues exceeding RM1.5 million, which face a "double taxation" from both the manufacturer-level sales tax and the retail-level service tax.
Tobacco Companies' Response to Tax Increase

Similar to the beverage sector, major tobacco manufacturers are also planning to raise prices. British American Tobacco (Malaysia) Bhd (BAT Malaysia) and JT International Bhd (JTI Malaysia) have stated their intention to increase prices once regulatory approval is secured. BAT Malaysia managing director Erik Stoel noted that the current 10 per cent sales tax is a significant increase from the previous 6 per cent GST, leaving his company with no alternative but to pass this cost to consumers. JTI Malaysia's managing director Cormac O’Rourke conveyed disappointment that the sales tax was set at 10 per cent, contrasting it with the 5 per cent rate applied before the GST was introduced.
Other Industry Reactions and Tax Implementation Details

Philip Morris (Malaysia) Sdn Bhd, a distributor of brands including Marlboro, is reportedly still evaluating its response to the new tax structure. The SST regime officially commenced on September 1, imposing a 10 per cent tax on goods and a 6 per cent tax on services. This marked the end of a three-month tax holiday period that began on June 1, during which the GST was zero-rated in anticipation of its repeal.

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Will consumers bear the full brunt of the new sales tax on alcohol and tobacco?

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