Ukrainian govt approves higher excise taxes on alcohol, tobacco products from July 1, 2024 to lowest level set in EU

MOSCOW. May 13 (Interfax) - The Ukrainian government has approved a bill amending the Tax Code to bring the country's legislation closer to that of the European Union in terms of excise tax rates.

The relevant decision was made at a government meeting last Friday, Ukrainian media reported, citing government's envoy to the Verkhovna Rada Taras Melnichuk.

The bill is aimed at implementing Article 353 of the EU-Ukraine Association Agreement and Annex XXVIII to Chapter 4 'Taxation' of Section V 'Economic and Sectoral Cooperation' of the Association Agreement and brings excise tax rates closer to the lowest level set in the EU, the statement said.

The bill proposes designating wines and other fermented beverages (including mixtures of fermented beverages and mixtures based on fermented beverages), the actual strength of which is higher than 1.2% of the volume units of ethyl alcohol, but not higher than 22% of the volume units of ethyl alcohol, as "intermediate products."

Additionally, the bill stipulates a 3.81 UAH increase in the excise tax rate from 8.42 UAH to 12.23 UAH per one liter for intermediate products (up to the level of the current rate for sparkling wines and carbonated wines, fermented beverages, flavored sparkling (carbonated) wines (beverages).

The bill sets forth a schedule of annual increases in such rates from July 1, 2024, up to and including December 31, 2027, taking into account the total difference between the rates expected to be in effect by January 1, 2028, as provided in the current legislation.

The term 'weighted average retail price of cigarette sales" is clarified.