AMG profit dips on back taxes owed
Box maker AMG Packaging had to pay just north of $10 million in back taxes to the Tax Administration of Jamaica (TAJ) for the financial year ended August 31, 2023, an expense that pulled the company off its years-long growth track.
AMG was forced to shave off an additional $10.5 million from its pretax profit of $133 million this year for what it says was a tax position taken by the company over the years 2017, 2019, 2020, and 2022, which it was later deemed to be liable for by the tax authority.
The company, which was listed on the Junior Stock Exchange in 2011, was eligible for the remission of income tax up to 2021. It completed its five-year tax-free period in 2016 and then got a 50 per cent tax remission up to June 2021.
But in the notes accompanying its just-released audited results, AMG explained that the back taxes it racked up represents “disallowed employment tax credit” over the four years based on a technical paper which was issued by the tax authority on November 10, 2022.
Overall, the box maker had to pay out $43 million in taxes for financial year 2023 against $18 million for the prior year. Administrative expense also ballooned to $129 million compared to $104 million over the prior year. The combined expenses pulled AMG’s earnings down 14 per cent year on year to $89.3 million on revenues which marginally grew to the $1-billion mark.
The dip in performance caused by the one-off tax expense comes at time when AMG has been making steady recovery from the COVID-19 pandemic which caused a fall off in its revenues.
AMG Packaging, among other cardboard manufacturing and distribution companies, was faced with paper shortages on the world market as well as the increases in freight costs, which not only drove up production costs but weighed on production output during the height of the pandemic in 2021 and 2022.
Still, the recent commissioning of its second factory at its Retirement Road complex in Kingston, alongside some normality in shipping prices and paper supply since the start of the year, have helped the company to keep business afloat.