According to Russian media vedomosti on May 29th, the Russian Ministry of Finance has submitted a bill proposing to levy a consumption tax on liquid nicotine to strengthen control over the tobacco market. This measure aims to reduce tax evasion and illegal imports, while allowing companies producing nicotine-containing products to receive deductions for raw materials.
Currently, the tax department is facing difficulties in controlling the use of liquid nicotine because it is not a taxable product and taxpayers are not required to submit a consumption tax declaration form. By imposing a consumption tax, it is expected to reduce the possibility of tax evasion schemes and decrease illegal imports. Additionally, due to the smaller number of importers, taxing imported liquid nicotine will be easier to regulate.
The Ministry of Finance stated that imposing a consumption tax on liquid nicotine will help reduce the market for illegal alcohol products and increase tax revenue. At the same time, the government will approve a list of pharmaceutical and medical products, and will fully refund the consumption tax on medical alcohol used in the production of products on the list to prevent price increases on pharmaceuticals.
The Federal Antitrust Commission has proposed to the Treasury Department to analyze the impact of these changes on the nicotine products market and related industries. While the Ministry of Industry and Trade has not yet received the bill, relevant departments are actively engaged in discussions to ensure the reasonableness and feasibility of the policy.
By imposing a consumption tax on liquid nicotine, the Ministry of Finance hopes to further regulate the tobacco market, reduce the circulation of illegal products, and protect consumer rights, maintaining market order. The passage of this legislation will signify a significant step for Russia in combating the illegal trade of tobacco products.
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