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Tax Gap of Heated Tobacco Products in Hungary

According to Act 68 of 2016 on Excise Duty, heated tobacco products (HTPs) are considered “novel tobacco products,” defined as tobacco products that are not cigarettes, cigars, cigarillos, smoking tobacco or electronic cigarette fluid, and therefore subject to excise taxation.
Since the act went into effect in 2017, heated tobacco has been taxed at a fixed rate of HUF 10 per stick or unit. The Act sets the tax rates to change as follows:

  • HUF 12.4 per piece from Jan 1, 2021, and
  • HUF 15 per piece from Apr 1, 2021.

Cigarettes are taxed according to a mixed excise system with a minimum excise duty. Under Act 68 of 2016, the rates are set to change as follows:

  • From Jul 1, 2020, the ad-valorem excise was 23% of the “retail selling price” and the specific excise was HUF 20500 per 1,000 stick, with a  minimum excise HUF per 1000 sticks.
  • From Jan 1, 2021, the specific excise increased to HUF 24,000 per 1000 sticks and the ad-valorem was not changed. The minimum excise was HUF 37,300 per 1000 sticks.
  • From Apr 1, 2021, the specific excise increased to HUF 26,000 per 1000 sticks, and the ad-valorem was not changed. The minimum excise is set to be HUF 39,300 per 1000 sticks.

Sources

Last Updated Feb. 22, 2021