The Rada approved a sharp increase in the excise tax on cigarettes

The Verkhovna Rada adopted as a basis a bill on amendments to the Tax Code of Ukraine to change excise tax rates on tobacco products. Bill No. 10190 was supported on first reading by 249 representative people. This was announced on Tuesday, June 4, by the first deputy head of the Verkhovna Rada Committee on Tax and Customs Policy, Yaroslav Zheleznyak.

The bill provides for an increase in excise tax rates on tobacco products to the minimum level determined by Directive 2011/64/EU until 2028.

To achieve this, it is planned to immediately increase the excise tax by 23% in 2025, and by another 5% annually in 2026-2028.

Excise tax rates on tobacco products are planned to be “tied” to the euro, and not to the hryvnia, so excise taxes may increase further as a result of devaluation of the hryvnia.

According to forecasts, thanks to the increase in excise taxes, the state budget will receive an additional UAH 612 million in 2025, UAH 5 billion in 2026, UAH 9.3 billion in 2027, and UAH 13.8 billion in 2028.

Zheleznyak added that the relevant committee continues to discuss the excise burden on TVENs (tobacco products for electric heating), and this issue will be discussed when preparing the bill for consideration in the second reading.

We remind you that the level of illicit trafficking in tobacco products in 2022 exceeded 20% of the entire domestic market, and this led to a shortage of UAH 20 billion in taxes from the state budget.