Category: Taxation

  • Pakistan: Cigarettes Seized for Tax Violations

    Pakistan: Cigarettes Seized for Tax Violations

    Photo: sezerozger

    Pakistan’s tax authorities confiscated 650 cartons of cigarettes from Philip Morris (Pakistan), alleging that the products were sold below the minimum retail price, reports Pakistan Today.

    “This action underscores the government’s commitment to upholding tax laws and safeguarding public health,” a Federal Bureau of Revenue official was quoted as saying. “Violations of these regulations not only undermine public health initiatives but also lead to revenue losses for the government.”

    Philip Morris insisted it was in full compliance with tax obligations for all its brand. A company spokesperson said that the company is cooperating with FBR and is dedicated to tackling illicit trade in Pakistan.

    leo.

  • Cambodia to Implement Tobacco VAT

    Cambodia to Implement Tobacco VAT

    Photo: mehaniq41

    Companies importing and distributing cigarettes in Cambodia will have to apply value-added tax to these products effective Aug. 1, reports  The Phnom Penh Post.

    The procedure mirrors the application of VAT on other taxed commodities, with a flat rate of 10 percent on all cigarette supplies in Cambodia.

    VAT paid at the point of importation or domestic purchase may be claimed as an income tax credit, deductible with output tax, according to the Ministry of Economy and Finance.

    Furthermore, enterprises importing cigarettes for export purposes will be permitted to pay a one-off value-added fee at the point of importation.

    The Cambodia Movement for Health (CMH) lauded the Ministry of Economy’s guidance as a clear indicator of the government’s commitment to combat the health risks associated with cigarettes and tobacco products.

    Nonetheless, CMH Executive Director Mom Kong urged the government to extend the VAT to include non-cigarette tobacco products, as well.  

    Citing research by the World Health Organization, Kong stated that imposing an additional tax of KHR500 ($0.125) per pack of cigarettes could increase market prices by 15 percent. This, in turn, could potentially reduce the number of smokers by 30,000 in the next year, and prevent 10,000 premature deaths over the next decade or so.

  • Taiwan Mulls Cigarette Tax Hike

    Taiwan Mulls Cigarette Tax Hike

    Photo: Taco Tuinstra

    The government of Taiwan is considering raising cigarette taxes next year, reports the Taipei Times, citing the Health Promotion Administration (HPA)

    Regulations require an expert committee to deliberate the tobacco tax every other year. During its most recent gathering, last year, the committee decided to leave tobacco taxes unaltered due the Covid-19 pandemic.

    HPA Director-General Wu Chao-chun told the Central News Agency that “controlling consumption through cost” is a successful tactic for smoking prevention, and vowed to continue promoting other methods, such as labeling and banning smoking in more areas.

    Smoking declined significantly after Taiwan raised the tobacco tax in 2009 and 2017, according to Lee Yue-chune, a professor of public health at National Yang Ming Chiao Tung University.

    Last year, a pack of cigarettes cost TWD116 (US$3.71) on average, with taxes accounting for 53 percent, below the WHO recommended minimum of 75 percent, she said.

    Taiwan spends an estimated TWD80 billion annually on treating smoking-related diseases, Lee said, recommending that the government set a target for the tobacco tax as a percentage of cigarette cost.

  • Russia to Increase Tobacco Taxes

    Russia to Increase Tobacco Taxes

    Photo: Sabphoto

    Excises for strong drinks, cigarettes and cars will increase effective Jan. 1, 2024, following the relevant amendment to the Internal Revenue Code approved by the State Duma budget and taxes committee, according to Tass.

    “Excise rates are adjusted by the inflation level in accordance with the forecast of the Ministry of Economic Development,” said Deputy Finance Minister Aleksey Sazanov. “In other words, rates provided for the year of 2023 are adjusted upward for the years of 2024, 2025 and 2026 in line with inflation level expected for these years under the forecast of the Ministry of Economic Development. Accordingly, 5 percent in 2024, 4 percent in 2025 and 4 percent in 2026.”

    Excises on cigarettes and papirosa cigarettes will go up by 5 percent in 2024 to RUB2,731 ($30.13) per 1,000 units plus 16 percent of the estimated value based on the maximum retail price but not less than RUB3,709, according to Interfax. This will increase to RUB2,840 plus 16 percent of the maximum retail price but not less than RUB3,857 in 2025 and to RUB2,954 per 1,000 units plus 16 percent of the maximum retail price but not less than RUB4,011 in 2026.

    The excise on cigars will increase by 5 percent to RUB292 per unit in 2024 instead of the planned RUB289 and increase to RUB304 in 2025 and RUB316 in 2026.

    The previously planned indexation for liquids for electronic nicotine-delivery systems will remain unchanged.

  • Price Hikes Drive Purchases Abroad

    Price Hikes Drive Purchases Abroad

    Photo: mema

    Consecutive price hikes appear to have prompted Danish smokers to purchase more cigarettes abroad, reports The Local.

    In 2019, Danish smokers purchased 250 million cigarettes in shops across the border. By 2022, that number increased to 700 million, according to the Ministry of Taxation. That reflects a rise in spending from DKR410 million ($60.34 million) to DKR1.15 billion.

    The figures coincide with the rise in price of cigarettes in Denmark. Between 2020 and 2022, the price of a pack of cigarettes increased from DKR40 to DKR60.

    “The Ministry of Taxation’s figures speak for themselves,” Janick Nytoft, managing director of The Cooperative Merchants, an industry organization, was quoted as saying by newswire Ritzau. “You cannot raise taxes in Denmark without increased cross-border trade. Cigarettes bought abroad do not make the Danes healthier, but the treasury and the shops poorer,”

    Meanwhile, a 2022 survey of smoking habits, showed that the rise is cigarette prices had not significantly reduced the number of smokers in Denmark.

    In 2022, 19 percent of people in Denmark smoked daily or occasionally, compared to 18 percent recorded in 2020. Among 15-19 year olds, smoking incidence actually increased. In 2022, 25 percent of this age group said they smoked daily or occasionally—up from 23 percent in 2022. The same age group also experienced a rise in users of e-cigarettes and smokeless nicotine products.

    Health activists said the tax ministry’s numbers proved that the price hikes had been too modest. Mads Lind, chief consultant at the Heart Association, urged the government to increase prices to DKR100 per pack.

    In addition to price hikes, Denmark has been debating other measures to reduce the number of smokers. Other proposals include plain packaging, restrictions on product displays and a so-called generational tobacco ban, which would prohibit sales to people born after a certain date.

    According to the National Health Authority, around 13,600 people die every year from smoking in Denmark.

  • Serbia to Raise Cigarette Excise

    Serbia to Raise Cigarette Excise

    Image: Tobacco Reporter archive

    Effective July 1, Serbia will raise the excise duty on cigarettes, reports SeeNews.

    The proportional component of the excise duty will remain 33 percent, according to the government, but the specific component will increase to RSD84.25 ($0.78) per pack from RSD82.75 per pack.

    The retail price will increase by RSD10 per pack of cigarettes.

    The specific component of the excise duty will increase by RSD1.5 every January and July until 2025, according to Serbia’s excise calendar that was adopted at the end of 2020. The increases are to keep Serbia in compliance with European Union standards.

  • Estonia to Raise Tobacco Excise Duty

    Estonia to Raise Tobacco Excise Duty

    Image: Tobacco Reporter archive

    Estonia’s Riigikogu passed a bill to raise excise duties on alcohol and tobacco products ahead of its second reading, according to ERR.

    The Alcohol, Tobacco, Fuel and Electricity Excise Duty Act and the Act Amending the Alcohol, Tobacco, Fuel and Electricity Excuse Duty Act and Other Acts had 57 votes in favor and 35 votes against.

    The bill will increase alcohol excise duty and tobacco excise by 5 percent per year between 2024 and 2026.

    An amendment to the bill put forth before the second reading states that maximum retail prices of cigars and cigarillos will be reported with a precision of $0.10 instead of $0.50, as previously outlined, if the cost is €10 ($10.91) or less.

    The bill also removes the excise duty increases on special diesel fuel in order to help keep Estonian farmers competitive.

    The bill passed its first reading on May 17. On June 8, the coalition decided to tie the bill to a vote of confidence to avoid a filibuster.

  • Shipper Responsible for Tax on Stolen Cigarettes

    Shipper Responsible for Tax on Stolen Cigarettes

    Photo: Siwakorn1933

    JTI Polska is responsible for hundreds of thousands of pounds in excise duties on cigarettes stolen during transport, the U.K. Supreme Court ruled June 14, reports Law360.

    Thieves took 289 cases from a JTI Polska vehicle parked at a U.K. service station during a trip from Poland to Jakubowski in the U.K.

    Jakubowski sought to recover from JTI the excise tax of about £450,000 ($570 million) owed on the stolen goods.

    The ruling in a similar case that determined which party pays the tax in the event goods are stolen remains valid, and there is no pressing reason to overturn it, the court said.

  • Higher Cigarette Taxes in Bangladesh

    Higher Cigarette Taxes in Bangladesh

    Image: Tobacco Reporter archive

    Cigarette manufacturers in Bangladesh will likely pay higher taxes on gross receipts from the next fiscal year as the National Board of Revenue (NBR) collects more taxes to discourage the “health hazardous” business, reports The Daily Star.

    The proposed tax increase is part of the Income Tax Bill 2023 introduced to Parliament by Finance Minister A.H.M. Mustafa Kamal earlier this month. The proposed bill will replace the current Income Tax Ordinance 1984.

    The new bill would have manufacturers of cigarettes, bidis or handmade cigarettes, chewing tobacco and smokeless tobacco paying a 3 percent tax on turnover at minimum, up from the current 1 percent. It would also place a flat 10 percent tax deducted at source (TDS) traders supplying tobacco leaf to tobacco companies, replacing the multiple rates of TDS.

    “We have proposed a hike in tax rates to discourage tobacco use,” said a senior official of the NBR.

    “We appreciate the NBR for responding positively to the call of raising tobacco taxes by the social activists,” said Atiur Rahman, chairperson of the think tank Unnayan Shamannay.

  • Farmer Group Calls for Lower Tobacco Tax

    Farmer Group Calls for Lower Tobacco Tax

    Image: Tobacco Reporter archive

    Mushfiq Ali Khan, president of Anjuman-e-Kashtkaran, a farmers’ group, has asked the government of Pakistan to reduce the federal excise duty on cigarettes so the regulated industry can resume purchasing from tobacco farmers, ensuring timely payments and safeguarding farmers’ livelihoods, reports the Pakistan Observer.

    A recent hike in tobacco excise taxes has prompted legal tobacco companies to cut production, driving down demand for leaf and prompting some farmers to sell their leaf on the black market. Farmers are not getting fair returns on their crops due to a decrease in sales in the legal industry, according to Khan. High taxes and a decline in sales, he said, have led the regulated industry to limit tobacco purchases.

    “On the other hand, the illicit cigarette manufacturing industry offers farmers unfair prices for their tobacco, with no guarantee of timely payment. Faced with this predicament, farmers are left with no choice but to rely on the illegal cigarette industry,” he said.