Russian Distributor Files Lawsuit For Extra E-Liquid Taxes
Babylon Vardex Group, a distributor of electronic cigarettes, filed a lawsuit with the Moscow Arbitration Court alleging that the Central Excise Tax (CAT) statute was unconstitutional due to its requirement that excise tax is paid on the liquid it contains.
Artem Shevelin, lead attorney for Babilon LLC, noted that in addition to the excise duty paid on the device, the customs authorities also require payment of excise duty on the E-liquid of electronic cigarettes. The volume of these restrictions for products imported in 2020-2022 has not been published. The preliminary claims hearings are set for September and October.
CAT stated that all e-cigarette-related operations are legal. Treasury also emphasized that e-cigarette vape oil is liable to excise duty, regardless of whether it is included or sold separately.
According to industry analysts, pressure on market participants will only force them into murky areas, rendering lawful companies unprofitable for both suppliers and sellers. However, the current circumstance necessitates a cross-sectoral discussion to consider potential double taxation avoidance.
The Russian Ministry of Industry and Trade suggested on August 9 to finish labeling trials for nicotine-containing liquids and electronic cigarettes ahead of schedule and to implement mandatory labeling for these items beginning November 1, 2022, ahead of schedule.
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