The Russian government has approved amendments to the Internal Revenue Code, which will result in an increase in excise taxes on alcohol, cigarettes, and cars starting from January 1, 2024. The adjustments to the consumption tax rates will be based on inflation forecasts provided by the Ministry of Economic Development. The anticipated growth rates for consumption taxes are projected to be 5% in 2024, 4% in 2025, and 4% in 2026.
Importantly, the range of consumption tax increases as outlined in these amendments does not include electronic cigarettes. This decision contrasts with the previous changes made to the consumption tax on e-cigarettes in Russia. From March 1 of the current year, Russia abolished the consumption tax on e-cigarettes while simultaneously increasing the tax rate by 11%, from 18 rubles to 20 rubles per milliliter (ml). Plans have been made to further raise the tax rate to 21 rubles/ml in the following year and to 22 rublesml by 2025.
Russia’s regulatory policies for e-cigarettes have been clarified and encompass various aspects, including full product traceability via honest marking, efforts to combat counterfeiting, regulations on production and circulation through the “Tobacco Market Comprehensive Supervision Law,” and the establishment of additive standards to regulate flavors.
Key time points for these regulatory changes include:
December 15, 2022: Manufacturers and importers register for the “Honesty Mark” system.
December 25, 2022: E-cigarette manufacturing and import must carry an “Honesty Mark.”
March 1, 2023: Wholesalers and retailers register for the “Honesty Mark” system.
April 1, 2023: Data of “honestly labeled” e-cigarettes must be uploaded; unlabeled products cannot clear customs.
April 2023: Amendments are passed, covering aspects such as flavors, sales channels, and minimum prices.
June 1, 2023: Operational restrictions on e-cigarette retail channels come into effect.
June 2023: “Tobacco Market Comprehensive Supervision Law” is enacted.
September 1, 2023: Changes include consumption tax increases, implementation of minimum prices, initiation of taste restrictions, and the start of license applications.
December 1, 2023: E-cigarettes without the “Honest Mark” will be prohibited from circulation.
March 1, 2024: Comprehensive accounting and supervision for e-cigarettes apply across production, distribution, and retail.
These regulations highlight Russia’s evolving approach to the e-cigarette market, with an emphasis on transparency, control, and taxation.