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Tax Gap of Heated Tobacco Products in Kazakhstan
Heated tobacco products were introduced in the tax code of Kazakhstan in 2017 with the launch of IQOS by Philip Morris International (PMI). On December 25th, 2017, the tax code was amended to create a new tax category for heated tobacco products defined as “tobacco products intended for inhaling an aerosol produced as a result of heating tobacco electronically or otherwise, without tobacco burning process” (Article 41). However, the excise tax rate was initially set at KZT 0 per kg, effective January 1st, 2018. Starting January 1st, 2020, the rate was increased to KZT 7,345 per kg of tobacco mixture. However, Law No. 135-VII of July 11th, 2022, modified the tax system for heated tobacco to a system similar to that of cigarettes (based on sticks). The law sets the new tax to be KZT 9,870 per 1000 units effective January 1st, 2023, and KZT 11,130 per 2000 sticks effective January 1st, 2024.
Kazakhstan uses a specific excise tax system to tax cigarettes, with tax tiers based on cigarettes characteristics (imported/local/filter/non-filter). As of January 1st, 2023, the specific excise tax rate was KZT 14,100 per 1000 cigarettes (Law No. 135-VII ZRK of July 2022). It is set to increase to KZT 15,900 per 1000 cigarettes, effective January 1st, 2024.
The law also imposes a minimum retail sales price (RSP) for all tobacco products. For a pack of heated tobacco sticks and cigarettes, the minimum price is set to be KZT 710 per 20 sticks (effective July 1st, 2023) and KZT 720 per 20 sticks (effective January 1st, 2024).
Sources:
- Code of the Republic of Kazakhstan No. 120-VI “On taxes and other obligatory payments to the budget (Tax Code)”, Dec 25, 2017
- Code of the Rep of Kazakhstan: On taxes and other obligatory payments to the budget (Tax code), amended as of May 21, 2023
- Law of the Republic of Kazakhstan No. 382-VI “On amendment and additions to the Code of the Republic of Kazakhstan”, Dec 10, 2020
- Law of the Republic of Kazakhstan No. 121-VI “On taxes and other obligatory payments to the budget (Tax Code)”, as of 01.01.2021
- Law of February 22, 2022 No. 196: "On the establishment of minimum retail prices for cigarettes with a filter, without a filter, cigarettes, cigarillos and products with heated tobacco"
- Law of the Republic of Kazakhstan dated July 11, 2022 No. 135-VII ZRK "On taxes and other obligatory payments to the budget" (Tax Code)"
Last updated Sept. 1, 2023