These measures aimed at adapting to European standards will significantly impact cigarette prices and the fight against illegal products.
Ukrainian Cigarette Prices in the EU Context
Currently, Ukraine stands out with some of the lowest tobacco product prices in the world. For instance, a pack of Marlboro costs about 2.29 euros here, while in European Union countries, this price ranges from 3.07 euros in Bulgaria to 16.25 euros in Ireland. However, this situation is set to change starting in 2025.
According to new legislation, the specific excise tax rate on cigarettes will increase by 23.4% — from 47 to 58 euros per thousand units, and the minimum tax obligation will rise by 23.9%, reaching 78 euros per thousand units. This was reported by the head of the Verkhovna Rada Committee on Finance, Taxation, and Customs Policy, Danilo Hetmantsev. A key innovation will be the linkage of excise taxes to the euro, which will help mitigate the effects of the hryvnia's devaluation and meet European requirements.
Price Growth Forecasts
Member of Parliament Yaroslav Zheleznyak emphasized that the cost of a pack of cigarettes will gradually increase in the coming years. By 2025, it may rise by 40 hryvnias, and by 2028, it could reach 160.5 hryvnias. These changes align with the recommendations of the International Monetary Fund and the European Commission, where the minimum excise tax rate on cigarettes is set at 90 euros per thousand units.
Combating the Illegal Market
One of the main challenges associated with the increase in excise taxes remains the high level of illegal tobacco turnover. A study by "Kantar Ukraine" shows that the share of illegal tobacco accounts for an average of 16.1% of the total market, which in 2024 could lead to losses for the state budget amounting to 21.9 billion hryvnias. To tackle this issue, Ukraine is developing an electronic system called "eExcise," which will provide transparent tracking of tobacco products from the manufacturer to the end consumer.
European Integration and Economic Goals
The head of the financial committee, Danilo Hetmantsev, emphasizes that the primary goal of the reform is to achieve European standards by 2028. These measures are part of a broader fiscal strategy within the framework of cooperation with the International Monetary Fund and the European Union. The Ministry of Finance describes the revision of excise taxes as an important step in meeting the requirements of the EU Directive aimed at harmonizing tax systems.
