Babylon Vardex Group, a distributor of electronic cigarettes, has filed a lawsuit with the Moscow Arbitration Court. They claim that the Central Excise Tax (CAT) is acting illegally by demanding that they pay a consumption tax on the liquid contained in the electronic cigarettes.
Artem Shevelin, the Chief Legal Officer of Babilon LLC, has clarified that aside from the consumption tax paid on devices, customs authorities also require a consumption tax to be paid on e-cigarette liquid. The specifics of the goods imported from 2020 to 2022 have not been disclosed. A preliminary hearing regarding the claim is scheduled to take place from September to October.
According to the China Association of Tobacco, all activities related to electronic cigarettes are legal. The Ministry of Finance also stated that consumption tax must be paid on e-cigarette liquid, whether sold individually or as part of a package.
Market experts added that pressure on market participants will only push them into the grey zone and make legal business unprofitable for suppliers and sellers. However, the current situation calls for interdepartmental meetings to discuss avoiding potential double taxation issues.
On August 9th, the Russian Ministry of Industry and Trade proposed to advance the label testing for nicotine liquids and electronic cigarettes and to initiate mandatory labeling for these products effective from November 1st, 2022.
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