EU aspirations to hit pockets of Ukrainian smokers

EU aspirations to hit Ukrainian smokers’ pocketsUkraine needs to bring excise rates for various tobacco products in line with EU levels, according to a European Commission report assessing progress made by EU candidate nations. The measure is expected to send cigarette prices soaring.

Alignment of tax laws with the EU is a common requirement for applicant states, in line with the Treaty on the European Union (TEU). Such countries must also sign up to certain obligations and values listed in the document.

“As regards excise duties on tobacco, the Ukraine Tax Code is broadly aligned with the EU acquis [collection of common rights and obligations]. Further alignment is needed regarding manufactured tobacco categories and applicable excise duty rates according to acquis,” the Commission said in the 2024 EU Enlargement Package report.

The current excise on cigarettes, cigarillos and tobacco products for electric heating (TVEN) in Ukraine amounts to €59 per 1000 items. In the EU, the minimum rate for manufactured tobacco is €90 per 1000 cigarettes. Harmonising tax legislation is expected to cause a surge in retail prices for tobacco products in Ukraine.

The alignment of excise rates for tobacco products was included in a government bill submitted to Kiev’s parliament, the Verkhovna Rada, earlier this year, Ukrainian news outlet Obozrevatel noted, adding that it is expected to undergo a second reading in December. The proposals reportedly stipulate that the rates should achieve the EU’s minimum level within three years.

According to estimates provided by the media outlet, if the measure is adopted, pack of cigarettes in Ukraine will cost 127.4 grivna (€2.91) next year compared to the current price of 93.8 grivna (€2.14) per pack. The price is expected to grow to 142.1 grivna (€3.24) and 155.8 grivna (€3.56) in 2026 and 2027 respectively, while in 2028 the price per pack is expected to reach 173 .6 grivna (€3.96).