The Government will increase excise taxes on tobacco products

On March 15, the Government approved the draft law "On Amendments to the Tax Code of Ukraine on Revision of Excise Tax Rates on Tobacco Products", which increases excise taxes on tobacco products.

The revision of tobacco excise taxes is aimed at harmonizing Ukrainian legislation with the requirements of the European Union. Since 2018, Ukraine has had a plan to increase excise taxes on tobacco products by 20% annually. This plan was supposed to ensure compliance with the EU Directive on the minimum excise tax liability of at least EUR 90 per 1000 cigarettes in 2025. However, due to the devaluation processes, in particular those caused by the war, the excise tax on cigarettes will reach only EUR 70 in 2025.

Thus, the current schedule does not allow to reach the level of taxation established in the EU, so it became necessary to revise the excise tax rates in order to gradually reach the minimum level established by the EU Directive by 2028.

The euroization of excise tax rates on tobacco products is recommended by the International Monetary Fund under the Extended Fund Facility (EFF) program and is envisaged by the National Revenue Strategy.

The implementation of the draft law will provide additional revenues to the state budget:

• in 2025 by UAH 612 million
• in 2026 - by UAH 5,001 million
• in 2027 by UAH 9,379 million,
• in 2028 by UAH 13,852 million.

This is important to support the defense and security sector, as all own revenues will be directed to the security and defense sector.

According to , the Public Health Center of the Ministry of Health of Ukraine, smoking causes 130,000 premature deaths of Ukrainians every year from diseases such as heart attack, stroke, cancer, and others. The implementation of the draft law will help achieve a social effect: reducing cigarette consumption, and, as a result, the incidence of cardiovascular disease and increasing the life expectancy of Ukrainians.