Cigarette prices will rise: Zelensky signs law to increase excise taxes
24 March 13:41
The President has signed Bill 11090 to increase the excise tax on tobacco products, which had been expected since December 2024. This was announced by the First Deputy Chairman of the Verkhovna Rada Committee on Finance, Taxation and Customs Policy Yaroslav Zheleznyak, "Komersant Ukrainian" reports
“Well, you won’t believe it, but 104 days after receiving the bill #11090, passing all the stages from rejection to acceptance….., the President signed it,” the MP wrote.
According to him, the signing of the document took place more than three months after the vote in the Verkhovna Rada. According to Zheleznyak, the state budget has already lost more than UAH 2 billion in revenues since the beginning of the year.
The law contains transitional provisions that were supposed to come into effect on January 1, 2025. The delay in signing it causes difficulties with its implementation and creates uncertainty for businesses regarding payments, he added.
The MP predicts an increase in the cost of a pack of cigarettes by about UAH 40, while the CES estimates that the price will rise by UAH 20-25.
According to the Rada’s website, the law was returned with the President’s signature on March 24.
What does the law change?
Law No. 11090 provides for the following key changes:
– Converting excise tax rates on tobacco products into euros;
– Extension of the current excise tax schedule until 2028 to finally reach the minimum level set in the EU (EUR 90 per 1000 cigarettes);
– implementation of the European practice of taxation of heating tobacco sticks in terms of differentiation of excise rates compared to cigarettes.
According to preliminary estimates, in 2025, the planned increase in excise taxes should have replenished the state budget by about UAH 20 billion.
How much will cigarettes rise in price
According to the law, in 2025, the specific excise rate on filter and non-filtered cigarettes will increase by 23.4%, from 47 to 58 euros per 1000 pieces.
The minimum tax liability for excise tax will increase by 23.9% – from EUR 63.45 to EUR 78 per 1000 units.
In addition, the rates will be calculated in euros instead of hryvnia.
The document proposes to establish a gradual increase in excise tax rates on tobacco products in the following years.
In 2025, the excise tax will increase by 23%, and in 2026-2028 it will grow by 5% per year.
The cost of a pack of cigarettes is expected to increase to:
- uAH 127.4 in 2025
- 142.1 UAH in 2026;
- 155.8 UAH in 2027;
- 173.6 UAH in 2028.
It is expected that the implementation of the draft law will result in an increase in budget revenues in 2025 in the amount of about UAH 612 million, in 2026 – UAH 5 billion, in 2027 – UAH 9.3 billion, and in 2028 – UAH 13.8 billion.
This increase will lead to a significant rise in the price of cigarettes in the country – the price of a pack may exceed UAH 170 within four years.
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