The Ministry of Finance of the Russian Federation has developed new rules for determining minimum prices for tobacco products (with the exception of cigarettes and cigarettes). The draft of the relevant government decree has been published on a single portal for posting draft laws.
The rules stipulate that the minimum price for tobacco products will be applied when such products are put into circulation, traded and withdrawn from circulation, with the exception of transactions in the field of foreign trade (when imported and exported from the Russian Federation, including to the EAEU countries) and sales in duty-free shops.
The rules contain formulas for calculating the minimum price for each of the following types of tobacco products:
-
pipe,
-
tobacco, thin-cut smoking,
-
tobacco, snuff
-
tobacco, chewing
-
tobacco, hookah tobacco,
-
cigars,
-
cigarillos (cigaritas),
-
bidi,
-
cretek.
As explained in the Ministry of Finance, the formulas set out in the rules are summarized as follows:
Minimum price = excise tax rate per unit of mass or quantity × (1 + VAT rate) × coefficient.
The coefficient in the formula reflects the cost of production or the cost of purchasing products by the importer, as well as logistics and infrastructure maintenance costs.
Source: