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Tax Gap of Heated Tobacco Products in Czech Republic

The Law on Excise Duties was amended on Feb 1, 2019 to define heated tobacco products as: “a tobacco product which contains tobacco, and for which the use does not involve gradual combustion of tobacco, use by nose, or chewing, and is not subject to tobacco tax. The subject of the tax on heated tobacco products is the tobacco contained in the heated tobacco product.” (Title VI of Act No. 80/2019).

The amendment went into effect on April 1, 2019, applying the specific excise tax for “other smoking tobacco” to heated tobacco. Effective April 1, 2020, the tax rate on all tobacco products was increased; the tax “other smoking tobacco” (and therefore on heated tobacco) was increased to CZK 2460 per kg tobacco. The law was amended again in 2020 to update current and future tax rates (Act No/ 609/2020 Coll., part 22). The rates are set to change to CZK 2720 per kilogram, effective Feb 1, 2021. 

Cigarettes, on the other hand, are taxed according to a mixed excise system that includes a specific excise of CZK 1610 per 1000 sticks, an ad-valorem excise of 30% of the retail sales price, and a minimum excise of CZK 2900 per 1000 sticks. The 2020 Act sets the specific and minimum rates to increase, starting Feb 1, 2021 to CZK 1790 per 1000 sticks (specific tax) and CZK 3200 per 1000 sticks (minimum excise).

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Last Updated Feb. 20, 2021