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Sri Lanka sugar tax to hit beverage firms

ECONOMYNEXT – The Sri Lankan government’s decision to impose a tax on sugar content on beverages is likely to affect the profitability of listed companies selling sweetened drinks, an analysis by a brokerage said.

The government’s 2018 budget presented to parliament Thursday by Finance Minister Mangala Samaraweera proposed to introduce an excise duty of 50 cents per gram of sugar contained in beverages with effect from midnight the same day.

First Capital Equities the new tax will hit food and beverage sector companies like Ceylon Cold Stores, Nestlé Lanka, and Cargills which make and sell soft drinks.

The increase in costs will impact the profitability of the companies affected, the brokerage said in an analysis of the budget.

Samaraweera told parliament the new tax was imposed as part of the ongoing effort to reduce diabetes and obesity, especially among children. (COLOMBO, November 11, 2017)

The comments on this report are provided by the Capital Markets Research Unit of First Capital Holdings PLC an investment bank in Sri Lanka.

The company operates in the capital markets of Sri Lanka in government securities – treasury bills and bonds, stock brokering and share market investments, asset management, private wealth management, retirement planning, personal financial planning, unit trust, margin trading, capital market research, trustee services, corporate finance advisory services including corporate debt structuring (debentures, trust certificates, commercial papers), valuations, restructuring, mergers and acquisitions, initial public offerings (IPOs) and project advisory.

The First Capital Group consists of First Capital Treasuries PLC, First Capital Limited, First Capital Markets Limited, First Capital Asset Management Limited and First Capital Equities (Private) Limited covering Colombo, Negombo, Matara, Kandy and Kurunegala.

First Capital is an investment bank offering services as Stock Brokers in Sri Lanka. The Company acts as a conduit between retail and institutional clients and the secondary market of the Colombo Stock Exchange. First Capital’s best-in-class research team provide a series of actionable trade recommendations, daily and periodic market commentaries and publications for Stock Brokers in Sri Lanka.