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The business community, represented by the European Business Association and the American Chamber of Commerce in Ukraine, urges Parliament to approve the government\u2019s version of draft law No. 11090 \u201cOn Amendments to the Tax Code of Ukraine Regarding the Revision of Excise Tax Rates on Tobacco Products\u201d during its second reading. The appeal specifically relates to maintaining the current approach to the mechanism for determining and setting rates, particularly preserving the ad valorem tax rate.<\/p>\n
The business sector emphasizes that any increase, even a gradual one, in the ad valorem tax rate will lead to a rise in the illegal market, reduced predictability of budget revenues, and broader negative consequences for the entire legal market of tobacco products. Ukraine has implemented the European excise taxation model for tobacco products. According to Directive 2011\/64, a mixed system is applied, combining a specific rate per unit of product with an ad valorem rate based on the maximum retail price. European practice from 2010 to 2024 shows that 22 out of 28 EU countries have reduced the ad valorem rate while increasing the specific rate. For instance, the Netherlands reduced their ad valorem rate to 5%, while Denmark, Portugal, and Sweden lowered theirs to 1%. Notably, in France, where the ad valorem rate is the highest in Europe (55%), the country also faces one of the highest levels of illegal trade.<\/p>\n
Additionally, increasing the ad valorem rate would result in a shortfall in projected revenues for both state and local budgets due to decreased supply and demand, particularly for high-end products.<\/p>\n
European legislation does not impose strict requirements on ad valorem rate levels. Neither the EU-Ukraine Association Agreement nor other international obligations require Ukraine to increase the ad valorem component. Furthermore, raising the ad valorem rate does not contribute to meeting the commitment to achieve the minimum excise tax rate of \u20ac90 per 1,000 units.<\/p>\n
To sustain the positive trend in reducing the illegal tobacco market, as highlighted in the latest study by KANTAR Ukraine, and achieved through exceptional efforts, we urge the unified business community\u2019s position to be considered when making the final decision on the revision of excise tax rates on tobacco products under draft law No. 11090.<\/p>\n
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The business community, represented by the European Business Association and the American Chamber of Commerce in Ukraine, urges Parliament to approve the government\u2019s version of draft law No. 11090 \u201cOn Amendments to the Tax Code of Ukraine Regarding the Revision of Excise Tax Rates on Tobacco Products\u201d during its second reading. The appeal specifically relates […]<\/p>\n","protected":false},"author":4489,"featured_media":605505,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false},"categories":[4,5],"tags":[],"yoast_head":"\n