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Business urges to prevent uncontrolled rising prices for tobacco products

11/ 04/ 2022
  Currently, the VRU Committee on Finance, Tax, and Customs Policy is preparing for the second reading of draft Law №7233 on Single Contribution and Accounting for Denatured Ethyl Alcohol and Chemical and Technical Products. The draft law proposes to supplement Article 18 of the Law of Ukraine On State Regulation of Production and Circulation of Ethyl, Cognac and Fruit Alcohol, Alcoholic Beverages, Tobacco Products, Liquids Used in Electronic Cigarettes and Fuel with provisions on control over maximum retail prices for tobacco products at their retail sale. Thus, it is proposed to temporarily, until the cessation or abolition of martial law, lift the sanctions for selling tobacco products at prices higher than the minimum retail price set by manufacturers/ importers and increased by the amount of excise tax on sales through the retail chain. In other words, the adoption of this rule will allow an uncontrolled increase in the price of tobacco products. The unscrupulous businesses may take advantage of it to earn additional profits during the war and, in fact, will distort the competitive environment. Moreover, the uncontrolled rise in tobacco prices will lead to a further increase in the illicit trade in tobacco products and, as a result, to budget losses due to non-receipt of excise and other taxes. The European Business Association opposes such legislative changes and asks MPs to exclude from Draft Law №7233 the relevant proposal to Article 18. After all, such initiatives are unacceptable – both for transparent business in Ukraine and for the public.

Currently, the VRU Committee on Finance, Tax, and Customs Policy is preparing for the second reading of draft Law №7233 on Single Contribution and Accounting for Denatured Ethyl Alcohol and Chemical and Technical Products.

The draft law proposes to supplement Article 18 of the Law of Ukraine “On State Regulation of Production and Circulation of Ethyl, Cognac and Fruit Alcohol, Alcoholic Beverages, Tobacco Products, Liquids Used in Electronic Cigarettes and Fuel” with provisions on control over maximum retail prices for tobacco products at their retail sale.

Thus, it is proposed to temporarily, until the cessation or abolition of martial law, lift the sanctions for selling tobacco products at prices higher than the minimum retail price set by manufacturers/ importers and increased by the amount of excise tax on sales through the retail chain.

In other words, the adoption of this rule will allow an uncontrolled increase in the price of tobacco products. The unscrupulous businesses may take advantage of it to earn additional profits during the war and, in fact, will distort the competitive environment. Moreover, the uncontrolled rise in tobacco prices will lead to a further increase in the illicit trade in tobacco products and, as a result, to budget losses due to non-receipt of excise and other taxes.

The European Business Association opposes such legislative changes and asks MPs to exclude from Draft Law №7233 the relevant proposal to Article 18. After all, such initiatives are unacceptable – both for transparent business in Ukraine and for the public.

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