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Tobacco companies to face excise duty hike in Budget, says AffinHwang Capital

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Tobacco companies to face excise duty hike in Budget, says AffinHwang Capital Empty Tobacco companies to face excise duty hike in Budget, says AffinHwang Capital

Post by Cals Wed 24 Sep 2014, 02:28

Tobacco companies to face excise duty hike in Budget, says AffinHwang Capital
Business & Markets 2014
Written by theedgemalaysia.com   
Tuesday, 23 September 2014 08:45

KUALA LUMPUR (Sept 23): AffinHwang Capital Research has maintained its Underweight rating on the tobacco sector due to the challenging environment and diminishing yield appeal, for sector.
In a note Tuesday, the research house said it expects industry sales volume to remain depressed given rising inflationary pressures and a possible excise duty hike before the upcoming budget.
AffinHwang Capital said it believes that the tobacco companies are in for another excise duty hike based on: i) the government’s resolve to decrease Malaysia’s fiscal deficit by boosting tax revenues, and ii) increased initiatives by Malaysia’s health ministry to clamp down on smoking habits.
“Like most of their counterparts in the rest of the world, Malaysians would have to pay a 6% goods and services tax (GST) starting on 1 April 2015 when buying a product or purchasing services.
“Nevertheless, based on historical trends, most of the increase would be borne by consumers, which we believe may further exacerbate the trade of illegal cigarettes.
“The 6% GST rate would replace the current 5% sales tax. Thus, we anticipate the GST would have a negative effect on the tobacco sub-sector,” it said.
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