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Tax Gap of Heated Tobacco Products in Switzerland

Heated tobacco products were introduced in Switzerland in 2015 with the launch of IQOS by Philip Morris International. According to an ordinance published on September 29, 2017 by the National Assembly, novel tobacco products (including heated tobacco and e-cigarettes) are not defined in the tax code but should be taxed as a type of “pipe tobacco” product (Ordinance 641.31). As a result, an ad-valorem excise is applied to heated tobacco and as of 2020, the rate was 12% of the retail sales price. The rate remains the same for 2021.

Switzerland applies a mixed excise tax system with a minimum excise to cigarettes. In 2020, the specific excise tax rate was CHF 118.32 per 1,000 sticks, the ad-valorem rate was 25% of the retail sales price, and the minimum excise was CHF 212.1 per 1,000 sticks. Two additional levies apply: a CHF 1.3 per 1,000 cigarettes levy to fund tobacco control (“prevention fund”) and a CHF 1.3 per 1,000 cigarettes levy to contribute to the “domestic tobacco financing fund” (SOTA).   

Note: The Federal Council of Switzerland has requested the Parliament to draft a new law that would consolidate excise taxation for all tobacco products and electronic cigarettes.  

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Last Updated Mar. 1, 2021