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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 (PMI). The Law on Excise Duties (Law No. XIII-1327) was amended on June 28th, 2018, to create a new tax category for heated tobacco. Heated tobacco products are defined as “tobacco products prepared to be used only in special electronic device, in which they are heated and do not burn, that are not cigars, cigarillos, cigarettes and smoking tobacco.” The new tax included a specific tax based on kgs, which became effective from March 1st, 2019. The tax was initially set based on kilograms. The Law was amended again in 2021 to change the tax system for heated tobacco, such that effective 2022, heated tobacco became taxed based on the number of sticks. As of March 1st, 2023, the tax on heated tobacco has been EUR 60.2 per 1000 units. Law XIV-446 sets the tax to increase to EUR 79.50 per 1000 units in 2024.
Lithuania applies a mixed excise tax system to cigarettes. As of March 1st, 2023, the specific excise tax rate was EUR 79.6 per 1000 cigarettes, the ad valorem excise rate was 25%, and the minimum excise was EUR 130 per 1000 cigarettes. The specific excise is set to increase to EUR 85.3 per 1000 cigarettes and the minimum excise to EUR 138 from March 1st, 2024.
Sources:
- The State Tax Inspectorate, Ministry of Finance: Current excise rates, recent changes and amendments
- The Law on Excise Duties (Law No. XIII-1327) as amended June 29, 2021 (Law No. XIV-446)
- The Law on Excise Duties (Law No. XIII-1327) as amended June 28, 2018
Last updated Sept. 1, 2023