You may have missed this breaking news over the holidays, but the tax law that took effect January 1st included a surprise bonus to export wine and spirit producers. The excise tax on “Craft” (defined by production quantities) wines and spirits was lowered dramatically, and that reduction specifically includes products imported into the U.S.
In the case of spirits the reduction is dramatic: from $13.50 per proof gallon to $2.70. For wine, the net effect is a credit reducing the tax from $1.57 per wine gallon to $1.07 per wine gallon. Importantly, they’ve also increased the ABV limit from a max of 14% to 16%, and included naturally sparkling wines.
What will this mean? Imports will suddenly become a lot more desirable to the entire Three-Tier system, because the new law effectively frees up margin, and allows imported brands to compete on a more level playing field with domestics.
To be clear, I’m not a beverage alcohol attorney and I don’t even play one on TV. But, I know a good deal when I hear one. I’m sharing the information as I understand it and have pasted below some links to help affected companies figure out exactly what this “Special Rule for 2018 and 2019” means to them.
TTB is working feverishly to develop the rules and guidelines for administering the new law, and just issued initial guidance.
A couple of things to keep in mind:
For more information visit Bevology website.