Business

Carreras's profits climb

BY SHAMILLE SCOTT Business reporter

Wednesday, July 25, 2012    

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THE Mattherhorn Spotlight — a cigarette loaded with menthol and infused with hazel nut casings --contributed to the 53 per cent increase in profits made by Carreras Limited.

The local manufacturer and distributor of cigarettes made $805.7 million in the three months to June 2012, an improvement on the $523.4 million earnings it reported for the same period last year.

The new variation to the Mattherhorn cigarette, packaged in slate and teal, contributed to the overall volumes at Carreras. A darker tobacco variation of the Craven A cigarette also helped to increased sales. The Craven A Black, packaged with silver highlights, is made from Black Virginia tobacco.

The second quarter is traditionally a strong period, as customers stock up before the Budget, said Carreras's financial director, Patrice Gray.

"Some customers anticipate the imposition of new or increased tax on cigarettes with each Budget reading," she said.

The Taxpayer Audit and Assessment Department (TAAD) took the Cigarette Company of Jamaica (CCJ) to the Privy Council in London last year appealing earlier rulings on what it claimed were $5.7 billion in outstanding tax arrears at the Carreras subsidiary.

But the Privy Council ruled against it in March, ordering that it repay the $1.7 billion that had already been paid over to the government, with interest.

The company's unaudited financial statement revealed that this amount has not yet been recovered and is reflected as taxation recoverable in the financial statement.

No provision for interest on the recoverable amounts has been recognised, said Gray.

The Privy Council, the nation's highest court, ruled that the appeal should be dismissed given that the section of the Income Tax Act that deals with "artificial or fictitious transactions directed at the reduction of tax liability" was not applicable.

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