Interpretation II: New Price Standard Introduced
On April 11, the Russian State Duma held a plenary session, where over 90% of the votes were cast in favor of the "Proposal on Amendments to Certain Legislative Acts of the Russian Federation" (hereinafter referred to as the "Proposal"). The proposal includes provisions such as setting a minimum retail price for e-cigarette products. The bill will be submitted to the Federation Council for review and awaits the President's signature.
Following the release of the proposal, questions have arisen regarding the reason for setting a minimum retail price for e-cigarette products and how the new price standards should be calculated. Jason Liang, a market researcher at 2FIRSTS in Russia, provided a professional interpretation of the proposal.
Proposal content
The sale price of nicotine-containing products must not be lower than the minimum price for nicotine-containing products. The minimum price for nicotine-containing products is determined by the Russian Federation Government.
2FIRSTS interpretation
The Russian Federal Law N15-FZ stipulates the minimum retail price (EMCTP) for tobacco products, which serves as the basis for the Russian Federation Government to levy excise tax, value-added tax, and other taxes. The law also stipulates that the retail price of any tobacco product must not be lower than the minimum retail price.
The calculation formula is as follows:
EMCTP = 0.02 x SA x (1 + SNDS) x 1.4
\\SA - The minimum value of the excise tax rate per 1,000 rubles for cigarettes and rolls, as specified in the Russian Federation Tax Code for the same period
\\SNDS - The value-added tax rate specified in the Russian Federation Tax Code
This legislation indicates that in the future, a national standard will be adopted for setting the minimum retail price for e-cigarette products, and the minimum pricing power for such products will be determined by the Russian Federation Government. Violations will be subject to penalties under the Russian Federation Code of Administrative Offenses and the Russian Federation Criminal Code.
This part of the proposal will come into effect on September 1, 2023.
Also read:
Russia Passes New Bill Banning All Vape Flavors
Russian PM Mishustin Considers Ban on E-cigarettes
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