#Regulation
THE EXCISE DUTY
STRUCTURE
Combined excise duty consisting of three components
is applied in Russia:
• specific (a fixed payment on any pack of cigarettes);
• ad valorem (% of the maximum retail price);
• minimum rate (used instead of the specific and
ad valorem components for cigarettes that cost up to
RUB 77).
Companies whose product portfolios consist primarily
of the premium price segment brands benefit when
the specific component prevails. Companies with the
value for money and bottom price segment portfolios
benefit when the ad valorem component prevails. This
for cigarettes at 75 RUR per pack
15% VAT
15% VAT
is explained by the fact that the ad valorem component
maintains the price difference between the cheapest
and the most expensive cigarettes, and the specific
component reduces this difference.
Why are excise duties increasing?
The excise duty increase is part of the national strategy
aimed at reducing the amount of tobacco products
consumed by the population. Excise duties also form
a significant source of income of the federal budget.
57% Excise
35% Excise
28% Manufacturer,
distributor and retail
50% Manufacturer, distributor and retail
for cigarettes at 150 RUR per pack
THE STATE DUMA POSTPONED THE INCREASE OF EXCISE DUTIES
BY 6 MONTHS, FROM 1 JANUARY 2018 TO 1 JULY 2018, AND IT WILL
BE LIMITED TO 10% AS PLANNED
Increase
in excise
contributions,
billion rubles
466.9
Increase in the
cost of a pack
of cigarettes,
rubles
17.74
63.8
2016
2008
466.9 bln constitutes approximately 1/6 of all the funds
allocated by the state for healthcare, i.e. medical care
for 145 mln people.
the excise duty increased almost 12 times, from
RUB 142 to RUB 1,680 per 1,000 pcs. This resulted
in a four-times increase in the cost of a pack of
cigarettes.
The increase in excise duty results in an increase in the
cost of a pack of cigarettes. Between 2008 and 2016,
THE DEPARTMENT OF CORPORATE AND LEGAL AFFAIRS IS WORKING ON PRESERVING
THE CURRENT WELL-BALANCED SYSTEM OF EXCISE REGULATION AS WELL AS ON
PROVIDING FOR THE FAIR EXCISE BURDEN FOR BOTH PREMIUM AND BOTTOM-PRICE
SEGMENTS
AN INTERESTING FACT
At the same time, the income of the population only
increased two times: if a person with an average
income used to spend 2.3% of their earnings on
cigarettes, now the expenditure on this item amounts
to 7% of the person’s monthly income. Expenses on
meals amount to about 30.8% per month.
74.89
2010
2016
As the results of the year, the State Duma has
postponed the increase of excise duties by 6 months,
from 1 January 2018 to 1 July 2018, and it will be
limited to 10% as planned.
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