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Tax Gap of Heated Tobacco Products in Russia
Heated tobacco products were introduced in Russia in 2015 with the launch of IQOS by Philip Morris International. In November 2016, amendments to the tax code of the Russian Federation were approved to create a new tax category heated tobacco products (Parts 1 and 2 of the Code). The amended law became effective January 1st, 2017, defining heated tobacco products as, “tobacco products intended for consumption by heating,” and applied a pure specific excise tax based on the weight of tobacco mixture. As of January 1st, 2023, the tax rate is RUB 8,669 per kg of tobacco. It is set to increase to RUB 9,016 per kg in 2024, and to RUB 9,377 per kg in 2025. Heating tobacco devices were taxed until 2022, when the tax code was amended to eliminate the tax on devices (Jan 2023).
Russia applies a mixed excise tax system on cigarettes, with an ad valorem excise based on the “maximum retail price” (MRP), a specific tax based on the number of sticks, and a minimum excise. The rates are set as follows:
- From January 1st, 2023: RUB 2,603 per 1000 cigarettes, an ad valorem of 16% of the MRP, and a minimum excise of RUB 3,467 per 1000 cigarettes
- From January 1st, 2024: RUB 2,707 per 1000 cigarettes, an ad valorem of 16% of the MRP, and a minimum excise of RUB 3,678 per 1000 cigarettes
- From January 1st, 2025: RUB 2,815 per 1000 cigarettes, an ad valorem of 16% of the MRP, and a minimum excise of RUB 3,825 per 1000 cigarettes
Source:
Last updated Sept. 1, 2023