How do business entities – retailers determine sales price of tobacco products and liquids used in electronic cigarettes, including received before 01.05.2022?

Sub-paragraph 14.1.106 Paragraph 14.1 Article 14 of the Tax Code of Ukraine as of 02.12.2010 № 2755-VI with changes and amendments (hereinafter – TCU) stipulates that the maximum retail prices (hereinafter – MRP) are prices set for excisable goods (products including all types of taxes (levies). Excise tax on excisable goods sold by business entities – retailers is not included in the MRP.

MRP for excisable goods (products) are set for tobacco products, tobacco, industrial tobacco substitutes and liquids used in electronic cigarettes by manufacturers or importers of goods (products) declaring such prices in manner prescribed by the TCU.

MRP until 01.01.2022 were set only on tobacco products for which an ad valorem rate of excise tax was set, namely for cigarettes with filter, cigarettes without filter (cigarettes) and cigars, from 01.01.2022 – on all types of tobacco products, tobacco, industrial tobacco substitutes and liquids used in electronic cigarettes.

Sale of excisable goods by business entities – retailers to which the MRP is set may not be carried out at prices higher than the MRP, increased by amount of excise tax on retail sale of excisable goods.

Sub-paragraph 214.1.4 Paragraph 214.1 Article 214 of the TCU stipulates that taxation base in case of calculating excise tax using the ad valorem rates is, in particular, the cost (including value added tax and excluding excise tax on retail sale of excisable goods by business entities – retailers) of excisable goods sold by retailers.

Excise tax on sales of tobacco products by business entities – retailers, as well as tobacco and industrial tobacco substitutes, liquids used in electronic cigarettes manufactured from 01.05.2022 is paid by manufacturers and importers in the process of actual sale.

For purposes of excise taxation on the sale of excisable goods by business entities – retailers, for producers and importers of tobacco products, tobacco and industrial tobacco substitutes, liquids used in electronic cigarettes the excise taxation base is, in particular, the cost at the maximum retail prices of tobacco products, tobacco and industrial tobacco substitutes, liquids used in electronic cigarettes, including value added and excise tax (Sub-paragraph 214.1.5 Paragraph 214.1 Article 214 of the TCU).

Paragraph 221.3 Article 221 of the TCU stipulates that if there are products of the same name in the place of trade of tobacco products, on packs, boxes and souvenir boxes of which different MRP are indicated, the sale of such tobacco products is carried out at prices not higher than those indicated on the respective packs, boxes and souvenir boxes, increased by the excise tax amount on retail products of tobacco products, tobacco and industrial tobacco substitutes sold by business entities – retailers.

As follows, determining the price at which retailers sell tobacco products and liquids used in electronic cigarettes, it is necessary to take into account the 5% excise tax on the sale of excisable goods by business entities – retailers.

Sale of tobacco products by business entities – retailers is carried out at prices not higher than the MRP, increased by the excise tax amount on retail sale of excisable goods. For other tobacco products produced before 01.01.2022 (except for filter cigarettes, unfiltered cigarettes (cigarettes), cigarillos), tobacco, industrial tobacco substitutes the sale is carried out at prices set by business entities – retailers (with value added tax and 5% excise tax on the sale of excisable goods by business entities – retailers).

Sale of liquids used in electronic cigarettes, produced from 01.01.2022, by business entities – retailers is carried out at prices not higher than the MRP (produced from 01.05.2022 – increased by the excise tax amount on retail sale of excisable goods) and at prices set by business entities – retailers (with value added tax) produced before 01.01.2022.

More information is in the “Knowledge Base” of public information and reference resource