Business draws attention to the legal collision in the regulation of e-cigarettes

22/ 12/ 2020

From January 1, 2021, e-cigarette liquids must be marked with excise tax stamps, and the production, wholesale and retail sale of liquids used for e-cigarette can be conducted only by businesses that have appropriate licenses. Thus, the amendments to the Tax Code stipulate that electronic cigarette liquids produced before January 1, 2021, are considered to be unlabeled with excise tax stamps. However, another mechanism for selling products that are already in circulation is not provided. According to the law, the required excise tax stamps will be available to manufacturers and importers of liquids no earlier than in the last days of December this year and used exclusively for labeling products manufactured after January 1, 2021, which, according to EBA member companies will block the functioning of the e-cigarette liquids market for several months, as law-abiding businesses will be forced to stop selling already purchased products and discard them by January 1, 2021, to avoid the prosecution for storing and/or selling unlabeled products. Besides, retailers will then have to keep empty shelves waiting for labeled products for some time, as manufacturers and importers need several months to set up the necessary processes to ensure product labeling. According to business estimates, this situation threatens the state with a shortfall of about 2 billion hryvnias and causes significant losses to tens of thousands of retail outlets. This collision can be solved by urgent amendments to the legislation, allowing the sale of already imported products at least until July 1, 2021. The European Business Association has already mentioned this problem and drew attention to possible ways to solve it in its appeals. To ensure the uninterrupted circulation of e-cigarette liquids and of their wholesale sale, the EBA member companies are currently preparing the necessary documents for obtaining such a license by January 1, 2021. However, business representatives report that in official sources, including the website of the State Tax Service, there are no details for the payment of licenses for the right to conduct the sale of electronic cigarettes liquids, which in fact makes it impossible to obtain a license until January 1, 2021. If the relevant issues are not resolved within the first two decades of December, no producers will be able to legally manufacture and sell e-cigarette liquids. Therefore, it is considered appropriate to provide for a transition period of 1 month, during which market participants will not be subject to sanctions for the sale of e-cigarette liquids without licenses, as such licenses cannot be obtained in time for reasons beyond the control of business entities. It is also appropriate to establish a transition period for the circulation of liquids not marked with excise tax stamps until June 30, 2021, for the sale of those products on which it is impossible to apply stamps. Therefore, the business appeals to Danylo Hetmantsev and Dmytro Razumkov to help solve the problem regarding licensing and the sale of already imported products as it did not arise due to the fault of companies. The business community hopes that the situation will be settled as soon as possible in 2020!

Thus, the amendments to the Tax Code stipulate that electronic cigarette liquids produced before January 1, 2021, are considered to be unlabeled with excise tax stamps. However, another mechanism for selling products that are already in circulation is not provided.

According to the law, the required excise tax stamps will be available to manufacturers and importers of liquids no earlier than in the last days of December this year and used exclusively for labeling products manufactured after January 1, 2021, which, according to EBA member companies will block the functioning of the e-cigarette liquids market for several months, as law-abiding businesses will be forced to stop selling already purchased products and discard them by January 1, 2021, to avoid the prosecution for storing and/or selling unlabeled products.

Besides, retailers will then have to keep empty shelves waiting for labeled products for some time, as manufacturers and importers need several months to set up the necessary processes to ensure product labeling. According to business estimates, this situation threatens the state with a shortfall of about 2 billion hryvnias and causes significant losses to tens of thousands of retail outlets.

This collision can be solved by urgent amendments to the legislation, allowing the sale of already imported products at least until July 1, 2021. The European Business Association has already mentioned this problem and drew attention to possible ways to solve it in its appeals.

To ensure the uninterrupted circulation of e-cigarette liquids and of their wholesale sale, the EBA member companies are currently preparing the necessary documents for obtaining such a license by January 1, 2021. However, business representatives report that in official sources, including the website of the State Tax Service, there are no details for the payment of licenses for the right to conduct the sale of electronic cigarettes liquids, which in fact makes it impossible to obtain a license until January 1, 2021. If the relevant issues are not resolved within the first two decades of December, no producers will be able to legally manufacture and sell e-cigarette liquids.

Therefore, it is considered appropriate to provide for a transition period of 1 month, during which market participants will not be subject to sanctions for the sale of e-cigarette liquids without licenses, as such licenses cannot be obtained in time for reasons beyond the control of business entities.

It is also appropriate to establish a transition period for the circulation of liquids not marked with excise tax stamps until June 30, 2021, for the sale of those products on which it is impossible to apply stamps.

Therefore, the business appeals to Danylo Hetmantsev and Dmytro Razumkov to help solve the problem regarding licensing and the sale of already imported products as it did not arise due to the fault of companies. The business community hopes that the situation will be settled as soon as possible in 2020!