Bulgaria set to increase cigarette excise duties in 2016

Written by on November 11, 2014 in Business - Comments Off on Bulgaria set to increase cigarette excise duties in 2016

Bulgaria’s Cabinet approved the timeline for increasing excise duties on cigarettes to meet minimum EU thresholds, with the first hike scheduled for January 1 2016, the government’s media service said on November 11.

A 2011 EU directive requires EU member states to increase cigarette excise duties to at least 90 euro (or about 176 leva) for 1000 cigarettes by January 1 2018. Bulgaria uses a combination of fixed and ad valorem rates, which, under current legislation, is required to total no less than 148 leva (about 75.7 euro) for 1000 cigarettes.

Under the bill approved by the Cabinet on November 11, the fixed duty will remain unchanged at 101 leva for 1000 cigarettes, but the proportional rate of the ad valorem component will rise from the current 23 per cent of the sale price to 25 per cent on January 1 2016, 27 per cent on January 1 2017, and 28 per cent on January 1 2018.

In nominal terms, this means that the total excise duty for 1000 cigarettes will stand at a minimum of 161 leva in 2016, 168 leva in 2017 and 177 leva starting January 1 2018. The hike will affect only cigarette prices, as duties on other tobacco products are set separately.

Finance Minister Vladislav Goranov said that the Cabinet decided to postpone the first increase to January 1 2016 in order to first reduce cigarette smuggling. “We do not think it fortunate to change the excise duty [on cigarettes] before we are certain that we have a handle on the process and have drastically reduced smuggling, which has increased over the past year and a half,” he said in a statement.

(Photo: Amr Safey/sxc.hu)

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