Price of cigarette package in Ukraine after excise duty hike by 40% to grow by UAH 4-5

The price of a package of cigarette sin Ukraine will grow by UAH 4-5 after the increase of excise duties by 40% in 2017, representatives of tobacco companies have said.

"On average the price of a package of cigarettes is to grow by UAH 4.50-5.00, to UAH 23," Director of the Corporate and Public Relations Department of JTI Ukraine Oleksandr Kohut told Interfax-Ukraine.

He said that the sector representatives have insisted for several years on adoption of a long-term excise duty increase plan – for three or five years.

"This approach meets liabilities regarding the increase of minimum excise duty rate to European indicators – EUR 90 per 1,000 cigarettes [now it is EUR 16 in Ukraine]," he said.

Ukraine would require at least 10 years to harmonize excise duties with the EU if the minimum excise duty will be increased by 20% every year.

Corporate Relations Director at Philip Morris Ukraine Natalia Bondarenko said that the large increase in the specific rate of the excise duty and the minimum excise liability by 40% could result in the reduction of the taxation base, while the narrowing market due to the sharp increase of the excise duties would complicate the revenue target by fiscal agencies.

Head of the public relations department at British American Tobacco Ukraine Yuriy Rylach said that the tobacco market requires the introduction of so-call "double excise duty minimum" for cigarettes.

"The essence of the tool is that double excise duty liability foreseen in the Tax Code would have served a basis for forming the largest retail price of cigarettes," he told Interfax-Ukraine.