As a reminder, the Ministry of Finance has prepared a draft Law of Ukraine "On Amendments to the Tax Code of Ukraine regarding the revision of excise tax rates on tobacco products". The document was registered in the Parliament under No. 11090. The draft law proposes to establish new excise tax rates on tobacco products from 01.01.2028, taking into account the minimum level set by Directive 2011/64/EU, while reducing the excise tax burden on HTPs.

On April 1, two alternative draft laws No. 11090-1 and No. 11090-2 were registered to this act, with amendments to the Tax Code to revise the excise tax rates on tobacco products

Draft LawNo. 11090-1 proposes to

  • to establish new excise tax rates on tobacco products starting from January 1, 2028, taking into account the minimum level set by Directive 2011/64/EU. At the same time, to provide for a gradual annual increase in excise tax rates starting from July 01, 2024 to December 31, 2027 to bring them to the specified minimum level;
  • to determine the monetary unit of measurement of the excise tax rate on tobacco products in euros;
  • to provide for the specifics of the procedure for calculating the excise tax on tobacco products at rates expressed in foreign currency;
  • in the new subparagraph 16-1 of subsection 5 of Section XX "Transitional Provisions" of the TCU, to establish a relaxation for the period of martial law of the restriction on measures to accumulate volumes of tobacco products in warehouses before increasing excise tax rates (anti-forstallation) by increasing the established amount of the average monthly volume of sales of tobacco products in the customs territory of Ukraine from 115 to 120 percent.

TheDraft Law No. 11090-2 provides for a gradual increase in specific excise tax rates on the minimum excise duty on cigarettes until 2029, until the minimum European level is reached. Such an increase is proposed to be achieved by maintaining the dynamics of a 20% increase in the rate in 2025 compared to the previous year, and then by 12% annually thereafter. It is proposed to increase excise tax rates on all other tobacco products at the same rate. For rates on electrically heated tobacco products, a more restrained growth rate (+7% year-on-year) is envisaged in 2026-2029.

The draft law also provides for a safeguard provision that ensures that Ukraine unconditionally reaches the EU minimum tax rate on cigarettes by setting a rate of EUR 90 per 1000 pieces in euro currency starting in 2029.