The Excise Department has extended an excise tax exemption applied for alcohol used for cleaning to mid-2021 to lower the tax burden for producers.
Approved on Dec 23, the move extends the excise tax exemption for cleaning alcohol to June 2021. The exemption has been effective since March when the Covid-19 outbreak surged.
The objective is to reduce the excise tax burden shouldered by manufacturers and support the public in safeguarding against Covid-19 through the use of cleansing alcohol products, said director-general Lavaron Sangsnit.
Mr Lavaron said production of pure cleaning alcohol is sufficient for domestic demand, with capacity at 2.32 million litres per day.
Major manufacturers of pure cleansing alcohol include the Liquor Distillery Organisation (LDO), producers of distilled spirits with a strength of 80 degrees or more, and a group of industrial operators that uses ethanol as fuel.
Ethanol is purified alcohol at 99.8-99.9% made from cassava or sugar residue that is blended with unleaded gasoline to make gasohol, a fuel used in the transport sector. Alcohol needs to be 70% pure to kill the Covid-19 virus.
The LDO has a production capacity of 60,000 litres per day and 18 million litres per year. Producers of distilled spirits have a production capacity of 365,000 litres per day and 100 million litres per year.
The group of industrial operators that uses ethanol as fuel has a production capacity of 6.6 million litres per day for a daily mixture with a volume of oil of 4.4 million litres. The remaining ethanol volume is used as fuel on a daily basis.
These three groups have manufactured and supplied pure cleansing alcohol and convertible alcohol to the medical and energy markets.
The pandemic caused demand for pure cleaning alcohol and convertible alcohol to rise significantly, especially for the medical and public health industries. In March, policymakers removed a restriction that blocked ethanol producers from making other forms of alcohol. In conjunction, the Excise Tax Department removed the excise tax for liquor with an alcohol content of over 80% that is processed into an ingredient to make sanitiser. Liquor companies are allowed to donate alcohol to make hand sanitiser.