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Tag: excise

  • Mexico Poised for Large Tobacco Tax Increase

    Mexico Poised for Large Tobacco Tax Increase

    Mexico’s proposed 2026 federal budget includes a steep hike in tobacco taxes that industry groups warn could expand illicit trade and harm small retailers. The plan would raise the ad valorem IEPS tax from 160% to 200% and gradually increase the per-cigarette quota from MX$0.61 ($0.033) to MX$1.15 ($0.062) by 2030.

    Officials say the measure aims to reduce smoking and fund healthcare, but trade associations argue it will instead push consumers toward cheaper illegal products. Legal cigarette packs could reach MX$100 ($5.40), while contraband versions sell for just MX$20–25 ($1.08–1.35), creating strong incentives for black-market purchases.

    According to the National Association of Small Traders (ANPEC), the price gap threatens 1.2 million small stores that support about 5 million people, as illicit sellers undercut legal retailers. The Confederation of Industrial Chambers (CONCAMIN) estimates tax evasion from illegal cigarettes costs the government MX$13–15 billion annually, with up to half of the tobacco market now illicit.

    Government data shows tobacco tax collections have fallen since 2019, dropping 6.9% year-on-year in 2024 and accounting for just 0.8% of total state income.

    The Senate is expected to debate and vote on the proposal starting October 20.

  • JTI Malaysia Backs Phased Tobacco Excise Hike, Stresses Illicit Concerns

    JTI Malaysia Backs Phased Tobacco Excise Hike, Stresses Illicit Concerns

    JTI Malaysia voiced support for the government’s phased tobacco excise increases for budget 2026, starting November 1, describing the approach as balanced for revenue stability and enforcement continuity. The company emphasized that illicit cigarettes remain a major concern, urging continued coordination between the Ministry of Finance, Royal Malaysian Customs, and industry players to ensure tax adjustments are matched by strong border enforcement.

    JTI also expressed disappointment that vape products were excluded from excise measures, despite full regulatory parity under the 2024 Control of Smoking Products for Public Health Act.

  • AOI Kenya Loses $183M Tax Case

    AOI Kenya Loses $183M Tax Case

    Alliance One Tobacco Kenya Limited (AOTKL) was ordered to pay the Kenya Revenue Authority (KRA) Sh23.7 billion ($182.8 million) after the High Court dismissed its appeal following a protracted tax dispute, ruling the company’s leaf processing amounted to “manufacturing,” and therefore was subject to excise duties, according to Daily Nation Africa. The ruling comes after years of wrangling over corporate income tax, excise duty, and value-added tax liabilities, with KRA alleging under-declarations and misclassification of tobacco products. According to filings, the revenue body argued that AOTKL reported discrepancies between sales declared for corporate tax versus VAT returns, while also disputing how the company classified stemmed tobacco and semi-processed products.

    “Our operations in Kenya ceased nearly 10 years ago; however, an excise tax matter with the Kenya Revenue Authority remains ongoing in the courts,” said Miranda Kinney, a spokesperson from AOI. “While we respect the judicial process, we strongly disagree with the position taken by the High Court and are pursuing all appropriate avenues of appeal. We remain committed to meeting our regulatory and tax obligations while maintaining transparent, responsible business practices. Given this is an ongoing legal matter, we cannot provide further comment at this time.” 

    According to Kenya Law Reporting, the case was brought before the Tax Appeals Tribunal, which in September 2024 issued a mixed ruling, partly upholding KRA’s claims. AOTKL’s transfer pricing practices also came under scrutiny, with KRA challenging documentation around full-cost mark-up adjustments with related parties. Ultimately, despite some partial relief from the Tribunal, the company has been ordered to settle the liability, making it one of the largest tax recoveries in Kenya’s tobacco sector.

  • Serbia Eliminates Favorable Tax Treatment for Alternative Products

    Serbia Eliminates Favorable Tax Treatment for Alternative Products

    Serbia’s Ministry of Finance announced sweeping changes to excise tax regulations, set to take effect in January 2026. Under the new rulebook, alternative tobacco products such as heated tobacco, hookah flavors, and herbal smoking products will now be taxed at 100% of the minimum cigarette excise duty, up from the previous 40%.

    The move aims to eliminate favorable tax treatment for alternatives and boost state revenue, as consumers increasingly shift away from traditional cigarettes. The list of excisable products has also been expanded to include nicotine pouches, biofuels, bioliquids, and natural gas.

    In addition, revamped tax return forms will now require twice-monthly filings and include new reporting codes and fields to improve accuracy and digital tracking. Officials say the overhaul will strengthen tax compliance and align with broader health and fiscal objectives.

  • Australia Stands with Highest Tobacco Taxes Despite Black Market Concerns 

    Australia Stands with Highest Tobacco Taxes Despite Black Market Concerns 

    A tobacco tax that’s helped drive Australian cigarette prices to world-leading highs won’t be lowered despite suggestions it has aided a rampant black market. Treasurer Jim Chalmers ruled out changing the tobacco excise Wednesday (June 4), dismissing New South Wales’ (NSW) Premier Chris Minns’ call that lower prices could help curb surging levels of illegal tobacco in the community.

    Federal excise taxes are A$1.40 (91 cents) per cigarette, driving the average cost of a pack of 20 to A$40 ($26). In the last six years, the excise taxes increased from A$16 to A$28 ($10.40 to $18.20) per pack, but the revenue collected by the government has still gone down as smokers turn to a flourishing black market, according to Minns. Tobacco tax revenue peaked at A$16.3 billion ($10.1 billion) in 2020 but has dipped to a projected A$7.4 billion ($4.8 billion) this year.

    Minns said police have better things to do than tobacco enforcement, and the “commonsense option” would be for the federal government to acknowledge the excise was not working. NSW Treasurer Daniel Mookhey insisted he would raise the issue with his federal counterpart despite the flat rejection.

    “We can’t ignore the fact there’s an interaction between the federal exercise and the emergence of illegal tobacco,” Mookhey said.

  • Illicit Cigarettes Costing Pakistan $1.1B Annually

    Illicit Cigarettes Costing Pakistan $1.1B Annually

    Tax evasion, weak enforcement of the track-and-trace system, and regulatory loopholes are crippling both public revenue and health safeguards, costing Pakistan over Rs300 billion ($1.1 billion) annually to the illicit cigarette trade, experts said. Speaking on “The Express Tribune Podcast,” in collaboration with #BehtareenPakistan, CEO of the Institute for Public Opinion Research (IPOR), Tariq Junaid, said, “This is not just a health issue—it’s an economic crisis. When more than 40% of the cigarette market goes untaxed, the state loses the ability to fund vital services. Smugglers are filling the gap while legitimate businesses suffer.”

    Panelists on the podcast said illegal cigarette manufacturers are exploiting the system by avoiding the Federal Excise Duty and producing below the legal price threshold. These untaxed products are then sold cheaply, undercutting lawful manufacturers and contributing to a shadow economy that thrives on regulatory inaction. The podcast also explored the broader impacts of the illicit trade. Experts emphasized that this is not simply a revenue issue, it also has dire implications for public health. Consumers of illegal cigarettes are often exposed to unregulated, potentially more harmful products.

    In response to these challenges, the panel advocated for the urgent implementation of a fully functional track-and-trace system to digitally monitor cigarette production and distribution. They also called for tougher penalties for violators and more transparent oversight by tax authorities.

    “There needs to be a serious political will to act,” Junaid said. “The solution is not just about enforcement—it’s about protecting Pakistan’s economy from systemic exploitation.”

  • Bulgarian Cigarette Prices Set to Rise for Second Time in 2025 

    Bulgarian Cigarette Prices Set to Rise for Second Time in 2025 

    Starting on May 1, the price of cigarettes in Bulgaria will rise by 40 to 50 stotinki (22 to 28 cents) per pack. This increase follows the latest adjustments to excise duties on tobacco products, which were approved as part of the 2025 budget.

    The new excise duty rates mark the second price hike this year, following a similar increase earlier when excise rates were raised by nearly 6%. This earlier rise was part of a planned, gradual increase that had been set in place since late 2022, when a four-year schedule was introduced. However, the government accelerated the schedule, deciding that the 2026 rates would be applied a year earlier.

    The Bulgarian Tobacco Industry Association clarified that there was no truth to recent rumors about a price surge of 2.50 leva ($1.38) per pack starting in April as several groups warned that the new excise duty directive would lead to a significant price hike. The Bulgarian Tobacco Industry Association refuted these claims, stating that the proposed changes to the excise duty directive, which would have raised the minimum rate to 180 euros per 1,000 cigarettes, had not been implemented. They noted, however, that the European Commission is expected to increase the minimum tobacco product excise duties more substantially in the coming years.

    According to the Ministry of Finance, the current excise structure will see a phased increase. As of January 1, 2025, the minimum excise duty for every 1,000 cigarettes was raised to 202 leva ($111). This will rise to 210 leva ($115.50) per 1,000 cigarettes starting in May, with a further increase of 12 leva each year until 2029. Similar increases are expected for other tobacco products and those containing tobacco substitutes.