Russian Government Considers Tobacco Retail Permit Legislation for Market Protection
According to a report by Kommersant on August 14, the Russian government is considering a bill regarding the retail licensing of tobacco products. The measure aims to protect the market from infringement by illegal products.
The bill was jointly drafted by Andrey Kutepov, Chairman of the Economic Policy Committee of the Federal Commission, and Alexey Sinytsyn, Vice Chairman.
In order to obtain a license, applicants must submit an application, photocopies of the main technical equipment's passport, and copies of documents confirming ownership or operational management of the equipment. Additionally, there is a national fee of an unspecified amount that must be paid.
Individuals who sell unmarked tobacco and nicotine-containing products (such as e-cigarette liquid, heated tobacco products) will face fines ranging from 10,000 (109.47 USD) to 20,000 rubles (218.94 USD), while public officials will be fined between 30,000 (328.40 USD) and 50,000 rubles (547.34 USD), and legal entities will face fines of 300,000 (3,284.04 USD) to 500,000 rubles (5,473.40 USD). The accompanying statement to the law acknowledges that these fines are not proportional to the profits made from selling tobacco products and do not adequately incentivize market participants to leave the black market.
According to a report from the Ministry of Finance, the proportion of illegal tobacco products in Russia is expected to increase from 11% in 2021 to over 13% by 2023.
The bill states that in the first nine months of 2023, illegal tobacco trading has resulted in approximately 75 billion rubles ($8.2 billion) in losses to the national budget, with this figure increasing to 11.3% in the second quarter of 2024.
Starting from September 1, 2023, the electronic registration system for tobacco product manufacturing permits will come into effect. From March 1, 2024, the Russian Federal Service for Alcohol Market Regulation (Росалкогольтабакконтроль) will be authorized to oversee the production and distribution of tobacco, crack down on illegal activities, and ensure compliance with relevant regulations in the supply, procurement, and transportation processes.
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