IMF Recommends that Ukraine Raise Excise Tax on Alcohol and Tobacco
By increasing the excise tax on cigarettes and beer, Ukraine will add approximately UAH 28.7 billion and UAH 4.5 billion to its budget, respectively in 2016, as stated in a report by the International Monetary Fund. The text of this report was made available to the Ukrainian news agency UKRINFORM.
Based on the IMF estimates, by increasing the excise tax on tobacco by 40% Ukraine would receive an income of UAH 28.7 billion (1.3% of GDP) this year. Raising the excise tax on beer by 100% would amount to UAH 4.5 billion (0.2% of GDP). According to the IMF report it is also recommended that Ukraine increase the excise duty on beer from UAH 2.48 per liter to UAH 3.10 per liter in the next year.
The increase on the excise duties on cigarettes, beer and alcoholic beverages came into effect on January 1, 2016 in Ukraine. Appropriate changes were incorporated in compliance with the law "On amendments to the Tax Code and certain legislative acts of Ukraine on ensuring balance of the budget revenues in 2016."
As of January 1, 2016, the excise tax on cigarettes at specific rate has increased by 40% to UAH 318.26 per thousand pieces in Ukraine. The excise tax on beer doubled to UAH 2.48 per liter.