Regarding determination of the retail selling price of tobacco products in amount not less than the minimum excise tax liability or specific excise tax rate using a coefficient of 1.45

Law № 4115, pursuant to which changes were made to the Tax Code of Ukraine (hereinafter – Code) and the Law № 3817, entered into force on March 25, 2025. Particularly changes provide that:

retail selling price of the excisable products for which the maximum retail prices are set (excluding excise tax on the sale of excisable products by retail business entities) cannot be less than the minimum excise tax liability for the excise tax payment on tobacco products established on the production date of such products, multiplied by a coefficient of 1.45, and for tobacco products for which only specific excise tax rate is established, it cannot be less than the specific excise tax rate established on the production date of such products, multiplied by a coefficient of 1.45 (Sub-paragraph 14.1.106 Paragraph 14.1 Article 14 of the Code);

the maximum retail price for excisable products (goods), which is set by producers or importers for tobacco products, tobacco, industrial tobacco substitutes, cannot be less than the retail selling price calculated according to the above specified procedure;

declaration on the maximum retail prices for excisable products (goods) is not be accepted if the maximum retail price for excisable products is set at amount lower than that established by (Sub-paragraph 14.1.106 Paragraph 14.1 Article 14 of the Code;

provisions of the Law № 4115, which provide for liability for retail sale of excisable products at prices lower than the retail selling price of excisable products, determined according to the above-specified procedure for its calculation, will enter into force on 01.07.2025.

At the same time, due to the fact that in 2024 share of the total amount of excise tax liabilities in weighted average retail price of cigarettes is 55.8%, i.e. less than 60%, starting from April 1 to December 31, 2025, cigarette producers and importers apply a coefficient of 1.1 to the minimum excise tax liability.

According to requirements of the Code, information on the total amount of the excise tax liabilities on cigarettes, weighted average retail selling price of cigarettes, and indicator (in percentage) characterizing share of the total amount of the excise tax liabilities in weighted average retail selling price of cigarettes has been published on the State Tax Service’s web portal. 

To which payers and from what period do requirements for compliance with the minimum retail price apply?

To all manufacturers and importers of tobacco products – in the process of submitting Declaration on the maximum retail prices starting from 25.03.2025.

For business entities involved in the retail sale of excisable products – for selling tobacco products, starting from the date of entry into force of the Law № 4115 and application of penalties – from 01.07.2025.

How to calculate the maximum retail price for submitting declarations on the maximum retail prices by payers and for the retail sale of tobacco products

Determining the maximum retail prices for tobacco products in declaration on the maximum retail prices, as well as the retail selling price (in retail sale), they must not be less than those established on the production date:

cigarettes under codes according to Ukrainian classification of the foreign economic activity products 2402 20 90 10 (cigarettes without a filter) and 2402 20 90 20 (cigarettes with a filter) – the minimum excise tax liability for paying the excise tax on such cigarettes, taking into account application of a coefficient of 1.1 (in a period from April 1, 2025 to December 31, 2025) and multiplied by a coefficient of 1.45;

cigarillos according to codes according to Ukrainian classification of the foreign economic activity products 2402 10 00 90 – the minimum excise tax liability for the excise tax payment on such cigarillos, multiplied by a coefficient of 1.45;

other tobacco products – specific excise tax rate, multiplied by a coefficient of 1.45.

How to ensure compliance with requirements for the sale of tobacco products at the price not lower than the established retail selling price and the maximum price declared by manufacturers and importers

Article 73 of the Law № 3817 (taking into account norms that will come into force according to the Law № 4115) provides for a liability for violations of the retail sale of tobacco products at prices:

higher than the maximum retail prices for such products (goods) indicated on the relevant packs, boxes or souvenir boxes of tobacco products, containers or packages of liquids used in electronic cigarettes, increased by amount of the excise tax on the retail sale of excisable products (goods) - 100 percent of the cost of such tobacco products, tobacco, industrial tobacco substitutes, liquids used in electronic cigarettes, but not less than 2 times the minimum wage established by the law as of January 1 of the reporting (tax) year;

lower than the retail selling price of excisable products, determined according to Sub-paragraph 14.1.106 Paragraph 14.1 Article 14 of the Tax Code of Ukraine - 100 percent of the cost of such excisable products sold, but not less than 2 times the minimum wage established by the law as of January 1 of the reporting (tax) year.

In order to ensure compliance by payers (manufacturers, importers and retailers) with requirements stipulated in Sub-paragraph 14.1.106 Paragraph 14.1 Article 14 of the Code regarding the sale of tobacco products at prices that must simultaneously be no less than the minimum retail selling price and not more than the maximum retail price, manufacturers and importers of tobacco products must bring the maximum retail prices into line with legislation by submitting Declarations on the maximum retail prices in compliance with such requirements.

For reference

Law of Ukraine № 3817-IX as of 18.06.2024 "On state regulation of production and circulation of ethyl alcohol, alcohol distillates, bioethanol, alcoholic beverages, tobacco products, tobacco raw materials, liquids used in electronic cigarettes and fuel".

Law of Ukraine № 4115-IХ as of 04.12.2024 “On amendments to the Tax Code of Ukraine and other Laws of Ukraine regarding revision of the excise tax rates on tobacco products” (published in the official newspaper “Holos Ukrayiny” № 58).