Regarding distribution of excise tax on the retail sale of tobacco products for inclusion in relevant local government budget

State Tax Service of Ukraine (starting from May 2022) monthly calculates excise tax shares from the retail sale of tobacco products for inclusion in relevant local government budget. This is envisaged by the Law of Ukraine № 2042-IX as of 15.02.2022 "On amendments to the Budget Code of Ukraine" and Resolution of the Cabinet of Ministers of Ukraine № 515 as of 03.05.2022 "Some questions regarding crediting of excise tax on the retail sale of tobacco products, tobacco and industrial tobacco substitutes, liquids used in electronic cigarettes by business entities (hereinafter – tobacco products)".

Calculation is made on the basis of data from registrars of settlement operations (abb. RRO) and software registrars of settlement operations (abb. PRRO) on the total value of operations in the retail sale of tobacco products for the reporting month.

State Tax Service has introduced exclusively risk-oriented mechanisms for organizing and conducting actual audits.

For actual distribution between territorial communities of excise tax on the retail sale by business entities of tobacco products, tobacco and industrial tobacco substitutes, liquids used in electronic cigarettes, territorial tax audit divisions focused their control and verification work on business entities that received licenses for the retail sale of tobacco products, but at the same time declare insignificant volumes of settlement operations through the RRО or in some cases volumes of sold tobacco products (sales value) on economic units even with a negative value.

As a result of coordinated and consistent work of the State Tax Service, a number of territories of territorial communities (codifier of administrative-territorial units and territories of territorial communities of the third level), which receive excise tax amounts from the retail sale of tobacco products by business entities to relevant budgets, from May 2022 to March 2023 has increased from 1196 to 1263 communities.

In addition, the total value of sold tobacco products correspondingly increased from 3.4 billion UAH per month to 9.1 billion UAH according to data from RRO/PRRO in Ukraine as a whole from May 2022 to March 2023.