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Business expects a gradual excise tax increase on cigarettes and HTPs

19/ 05/ 2021
  This week, the Verkhovna Rada will consider the draft law №4278 On Amendments to the Tax Code of Ukraine (on the taxation of goods that are moved (shipped) with international, postal and express services) in the second reading. Thus, according to preliminary information, the Verkhovna Rada Committee on Finance, Tax and Customs Policy supported the business proposal to reconsider the approach to raising excise tax rates on tobacco-heated products - in favor of their gradual increase. It should be reminded that in accordance with the adopted Law on Amendments to the Tax Code of Ukraine №466-IX, from January 2021 the excise tax rate on HTPs was increased by 320%, according to the EBA experts. Such a significant increase in excise tax, according to business representatives, carries a number of threats and negative consequences not only in the context of the impact on the tobacco industry but also on the economy as a whole, including the growth of the illegal market and significant state budget shortfalls. The proposal, supported by the relevant Committee, implies an increase in the rate of excise tax on HTPs by 200% compared to the rate in force in 2020 and by 30% annually during 2022-2025. This will avoid a drop in sales of tobacco-heated products, prevent an increase in the share of illegal trade in these products and reduce excise tax revenues. The European Business Association thanks the relevant VRU committee that the voice of business was heard. We hope that the draft law in the new version will be supported by the Verkhovna Rada  in the second reading.   Be the first to learn about the latest EBA news with our Telegram-channel – EBAUkraine.

This week, the Verkhovna Rada will consider the draft law №4278 “On Amendments to the Tax Code of Ukraine (on the taxation of goods that are moved (shipped) with international, postal and express services)” in the second reading.

Thus, according to preliminary information, the Verkhovna Rada Committee on Finance, Tax and Customs Policy supported the business proposal to reconsider the approach to raising excise tax rates on tobacco-heated products – in favor of their gradual increase.

It should be reminded that in accordance with the adopted Law on Amendments to the Tax Code of Ukraine №466-IX, from January 2021 the excise tax rate on HTPs was increased by 320%, according to the EBA experts. Such a significant increase in excise tax, according to business representatives, carries a number of threats and negative consequences not only in the context of the impact on the tobacco industry but also on the economy as a whole, including the growth of the illegal market and significant state budget shortfalls.

The proposal, supported by the relevant Committee, implies an increase in the rate of excise tax on HTPs by 200% compared to the rate in force in 2020 and by 30% annually during 2022-2025. This will avoid a drop in sales of tobacco-heated products, prevent an increase in the share of illegal trade in these products and reduce excise tax revenues.

The European Business Association thanks the relevant VRU committee that the voice of business was heard. We hope that the draft law in the new version will be supported by the Verkhovna Rada  in the second reading.

 

Be the first to learn about the latest EBA news with our Telegram-channel EBAUkraine.

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