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Tax Gap of Heated Tobacco Products in Lithuania

Heated tobacco products were introduced in Lithuania in 2017 with the launch of IQOS by Philip Morris International. The Law on Excise Duties (Law No. XIII-1327) was amended on June 28, 2018 to create a new tax category for heated tobacco. Heated tobacco is defined as “tobacco products prepared to be used only in special electronic devices, in which they are heated and do not burn, that are not cigars, cigarillos, cigarettes, or smoking tobacco.” The new tax included a specific tax based on kilograms, which became effective from March 1, 2019. As of March 1, 2020, the specific excise tax applied to heated tobacco was EUR 113.2 per kilogram. The rate is not scheduled to increase in 2021.

Lithuania applies a mixed excise tax system to cigarettes. As of March 1, 2020, the specific excise tax rate was EUR 65.7 per 1000 sticks, the ad-valorem excise rate was 25%, and the minimum excise was EUR 108.2 per 1000 sticks. The specific excise is set to increase to EUR 69.4 per 1000 sticks and the minimum excise to EUR 115.5 per 1000 sticks from March 1, 2021.

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Last Updated Feb. 22, 2021