As part of aligning its tax legislation with the norms of the European Union, Ukraine must harmonize excise rates for different categories of tobacco products with European standards, according to a report by the European Commission (EC) within the framework of the EU enlargement package for 2024, which assesses the progress made by candidate and potential candidate countries for EU membership.
"Regarding excise duties on tobacco products, the Tax Code of Ukraine is generally in line with EU legislation. Further alignment is needed for various categories of tobacco products and the excise rates applied in accordance with EU norms," – the report states.
The alignment of tax rates on cigarettes and heated tobacco products (HTPs) is provided for in government bill No. 11090, submitted by the Cabinet of Ministers to the Verkhovna Rada on March 18, 2024, based on proposals from the Ministry of Finance. It is expected that the Verkhovna Rada will review it in the second reading in December.
As previously reported, bill No. 11090 includes the transition of excise tax rates on tobacco products to euros; the extension of the current excise schedule until 2028 to ultimately achieve the minimum level established in the EU (EUR 90 per 1000 cigarettes), as well as the implementation of European practices for taxing HTPs in terms of differentiating excise rates compared to cigarettes.
Business associations have already appealed to parliament to support the government bill No. 11090 on increasing the excise tax on tobacco products and harmonizing it with the European approach to taxing HTPs in the second reading.