On July 26th, the Expert Council held a meeting in the State Duma, which was held in a hybrid format with some participants attending via video conference. The meeting was hosted and reported on by Sergei Katasunov, co-chair of the Tobacco Industry Expert Committee. Attendees included representatives from the Federal Tax Service, Federal Customs Service, Ministry of Internal Affairs, Ministry of Economic Development, Ministry of Agriculture, Ministry of Finance, VNIITTI, Small Business Trade Association, representatives from Imperial Tobacco, Philip Morris, JTI, Pogar, and the Nicotine Alliance represented by its Chairman, Andrei Loskutov.
The meeting discussed a total of five topics.
The first agenda item is to consider legislation aimed at restricting the circulation of nicotine-containing liquids, heated tobacco products, and disposable e-cigarettes, in order to regulate the distribution of nicotine products within the borders of the Russian Federation (excluding special consumption taxes).
Reporter Sergei Katasov highlighted that Russia has now banned individuals from purchasing tobacco products above a set limit. Before, unscrupulous sellers were exploiting this loophole by transporting large quantities of goods for personal consumption. Similar restrictions should be enforced on nicotine-containing products. However, there is still debate around the allowable range of products.
Andrey Zheleznov, representative of CRPT, provided attendees with the latest updates on the progress of labeling nicotine-containing products. According to the current plan, Russia will begin a comprehensive ban on the sale of unlabeled goods in November 2023. Industry participants agree that the introduction of mandatory electronic labeling needs to be accelerated.
The second item on the agenda pertains to the progress made in the development of a draft law concerning the national regulation of the production and turnover of tobacco and nicotine-containing products and their raw materials. One of the developers of the proposed legislation, Georgy Golovanov, informed committee members that the comprehensive bill was submitted to the Russian Federation government by the Ministry of Finance. The content of the bill has been improved upon at the request of the Ministry of Energy and the Ministry of Justice, particularly with the incorporation of regulatory principles and methods by the latter. As per the recommendations of the Ministry of Economic Development, limitations on tobacco licenses have now been removed. The aim is to submit the key legislation for this industry to the State Duma before the end of September. Sergey Katasunov highlighted the most important development, which is the impending establishment of a new regulatory body that will directly address issues pertaining to tobacco.
The third item on the agenda addressed progress in the development of technical regulations for nicotine products within the Eurasian Economic Union. Naira Vardanyan, chief expert of the Armenian Ministry of Economy, discussed the main stages of regulation development, which is currently under public discussion. Given the importance of the document, Sergey Katasunov proposed the organization of a special council meeting of experts to address the issue and convey the views of the Russian tobacco industry to the regulators in charge of the technical regulations.
The fourth item on the agenda was "National Technical Regulations" - the discussion of the draft federal law No. 99437-8, which amends the federal law on tobacco product technical regulations. It was suggested that a precise definition of chewing tobacco is necessary to supplement the regulations, as well as limiting the nicotine content to no more than 3.5%. The expert council is expected to develop a consensus agreement and make revisions as necessary. Additionally, they have decided to request production certificates from manufacturers of sniffing and chewing tobacco.
The fifth item on the agenda is to report the locations where tobacco and nicotine-containing products are sold to adult consumers, in order to prevent the purchase of potentially illegal products. The spokesperson for this proposal is Konstantin Reinot, government relations manager for Philip Morris.
Currently, it is prohibited to advertise tobacco and nicotine-containing products, and consumer protection laws require complete information be provided about such products. Under these regulations, sellers who do not want to face fines may withhold information about product classification from consumers. Therefore, it is necessary to clearly distinguish between the concepts of advertising and information. This would eliminate existing contradictions and enable consumers to obtain honest and detailed information about the products being sold.
Zheleznov presented a report on tobacco industry control based on a labeling system and updated attendees on the progress of labeling experiments with nicotine products. He emphasized that labels were a transparent measure for market participants, serving to combat counterfeit products and help distributors distinguish between legal and illegal products. Currently, CRPT (Advanced Technology Development Center) has completed the development of personal account systems for the Federal Tax Service and Federal Customs Service. Zheleznov also indicated plans to complete the final transition from traditional consumption tax stamps to digital tax stamps by 2024.
At the end of the meeting, Sergei Katasunov raised two work issues. The first was calculating a reasonable consumption tax for nicotine-containing products. The most effective method is to compare them with traditional tobacco based on certain standards and add it to the current consumption tax on cigarettes. The expert council is waiting for VNIITTI to come to a scientific conclusion before fall, which will help determine the tax rate for traditional tobacco and nicotine-containing products. The second issue was regarding imposing a consumption tax on electronic cigarettes. Currently, according to tax law, a product cannot have two consumption tax codes. If both the device and liquid are subject to consumption tax, it will be necessary to make appropriate changes to the tax law.
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For more information on the latest developments in Russian e-cigarette regulations, please click on the topic link below.
For more information on the latest developments regarding electronic cigarette regulations in Russia, please click on the link to this dedicated topic.
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