The nicotine production license and minimum retail price system in Russia officially came into effect on September 1st. In March of this year, the introduction of a licensing bill for the production and circulation of nicotine products was approved at a government meeting. In April, the Russian State Duma overwhelmingly voted in favor (with over 90% support) of setting a minimum retail price for e-cigarette products.
Nicotine Production and Distribution License System
According to this bill, it is required to obtain licenses for the production and importation of tobacco, nicotine-containing products, and raw materials. Additionally, producers are obligated to register the main equipment used for producing such products. If the equipment is not in use, it must be sealed. Equipment used in illegal production will also be confiscated. Records of products and materials will be kept in the "Honest Label" marking system. This will ensure the implementation of comprehensive government supervision, as explained by the Ministry of Finance.
The bill also includes other measures to prevent illegal production and sales, such as prohibiting the sale of tobacco products and nicotine-containing products in non-consumer packaging and requiring the presence of accompanying documents and labels in their transactions.
The nicotine production license system requires that the production and circulation activities of tobacco, nicotine products, and raw materials obtain a license. There are a total of six types of licenses: raw material production license, product production license, product import license, raw material import license, cigar production license, and duty-free shop sales license.
Minimum retail price system for e-cigarettes
The selling price of nicotine-containing products must not be lower than the minimum price set for nicotine-containing products. The minimum price for nicotine-containing products is determined by the Russian Federation government. The N15-FZ federal law in Russia specifies the minimum retail price (EMCTP) for tobacco products, which serves as the basis for calculating consumption tax, value-added tax, and other taxes collected by the Russian Federation government. The law also stipulates that the retail price of any tobacco product must not be lower than the minimum retail price.
The calculation method is as follows: - The lowest price = tax rate of the unit quality or volume × (1 + value-added tax rate) × increase coefficient; - Value-added tax rate - determined according to the Russian Federation tax law; - Increase coefficient - additional coefficient considering the product characteristics (different product categories have different coefficients, ranging from 1.0 to 3.0).
This bill heralds a future where e-cigarette products will be subject to a national standard in setting minimum retail prices. The power to establish the minimum pricing for any such product will be dictated by the Russian Federation government, with violations being subject to penalties under the Russian Federation Administrative Offenses Code and the Russian Federation Criminal Code.
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