EU Commission urges Ukraine to harmonize tobacco excise taxes

As part of efforts to align Ukraine's tax laws with European Union standards, the country has to harmonize excise rates for various tobacco products with EU acquis, according to the European Commission's (EC) 2024 EU Enlargement Package report assessing progress made by candidate and potential candidate countries.

"As regards excise duties on tobacco, the Ukraine Tax Code is broadly aligned with the EU acquis. Further alignment is needed regarding manufactured tobacco categories and applicable excise duty rates according to acquis," the European Commission said in the report.

The alignment of excise rates for cigarettes and tobacco products for electronic heating devices (e-cigarettes and similar) is included in government bill No. 11090, submitted to the Verkhovna Rada by the Cabinet of Ministers on March 18, 2024, based on proposals from the Ministry of Finance. The bill is expected to undergo its second reading in December.

Bill No. 11090 proposes converting excise rates on tobacco products to euros, extending the current excise schedule until 2028 to achieve the EU's minimum level of EUR 90 per 1,000 cigarettes, and adopting EU practices in taxing heated tobacco products by differentiating excise rates compared to cigarettes.

Business associations have urged Parliament to support the government's bill during the second reading, emphasizing the importance of aligning excise tax policies with EU approaches to taxing heated tobacco products.