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Tax Gap of Heated Tobacco Products in Croatia
In 2017, Croatia amended the Law on Excise Duties to include new categories for tobacco and nicotine products, including one for heated tobacco. The tax became effective January 1st, 2017. Despite being in a separate category, heated tobacco products are taxed at the same rate as “other smoking tobacco,” under a specific tax system based on the weight of tobacco mixture. On April 1st, 2020 (the beginning of the Croatian tax year,) the specific excise tax on heated tobacco and other smoking tobacco was increased from HRK 600 to HRK 800 per kg of tobacco.
The excise tax system for cigarettes consists of a mixed system which includes a specific excise, an ad valorem excise, and a minimum excise duty. Since April 1st, 2020, the rates are as follows:
- Specific excise: HRK 370 per 1000 cigarettes
- Ad valorem excise: 34% of the retail sales cigarettes
- Minimum excise: HRK 824 per 1000 cigarettes
The Ministry of Finance announced plans to increase the tax on tobacco products from March 1st, 2021. The draft decree proposes the following:
- For heated tobacco, the specific excise tax would increase to HRK 1400 per kg of tobacco.
- For conventional cigarettes, the specific excise would increase to HRK 400 per 1000 cigarettes, and the ad valorem will remain at 34% of the retail sales price (RSP). The minimum excise would increase to HRK 888 per 1000 cigarettes.
Sources:
- Excise Duty Act
- Decree increasing the tax rate on tobacco products, including HTPs, adopted by the Government of the Republic of Croatia on March 19, 2020
- Draft Decree on the amount of excise duty on tobacco products (20.02.2021)
Last updated Sept. 1, 2023