On 1 January 2021, new tobacco tax measures entered into force under Law 466-IX “On Amending the Tax Code of Ukraine on Improving Tax Administration, Eliminating Technical and Logical Inconsistencies in Tax Law”. These relate to heated tobacco products (HTPs), where heat sticks will no longer be taxed per kilogram of tobacco but per 1000 sticks. This is expected to improve the structure of the excise tax on HTPs and will increase the tax per stick further. The specific excise tax on heat sticks has increased by 4-fold, from 1139.76 Ukrainian hryvnia (UAH) per kilogram to 1456.3 UAH per 1000 sticks, making it equivalent to the minimum excise applied on cigarettes. It is projected that revenues will increase from around 1 billion UAH per year to more than 4 billion. The rate will increase by a further 20% annually, in line with the tax rate on cigarettes, to reach a total excise of 3019.85 UAH per 1000 pieces by 2025.
Additionally, the amendment includes a new tax on electronic nicotine and non-nicotine delivery systems (ENDS/ENNDS). Therefore, electronic cigarette liquids, with and without nicotine, are now taxed at the rate of 3000 UAH per litre. The containers (packaging) of these liquids will also be marked with the excise tax mark.
In line with the “7-year plan” on raising taxes on tobacco, adopted in December 2017, the excise rate on cigarettes has also increased by 20% on 1 January 2021.
The new measures applied to HTPs and ENDS/ENNDS are aligned with the guidance from the Conference of the Parties, to regulate novel and emerging tobacco products, and are expected to reduce the affordability of these increasingly popular new products, of the consumption of cigarettes, and further increasing revenues from tobacco and nicotine product taxes for the Government.
For more information, please, contact: Ms Svitlana Ilinova, Ministry of Health (email: email@example.com).
For the latest information on tobacco control in Ukraine, please, see this Party webpage.