The largest tobacco manufacturer in Ukraine and the third-largest taxpayer in Ukraine - Philip Morris Ukraine - informed the permanent representative office of the International Monetary Fund in Ukraine that in January 2021 the company is forced to sharply reduce the order of excise stamps - from the planned 50 million to 35 million pieces.
This is stated in an official letter from Philip Morris Sales & Distribution to Josta Lyungman, Permanent Representative of the IMF in Ukraine, UNIAN writes.
The main reason for the step is a sharp increase in excise duty on TIENs - by 320% at once - from January 2021.
"The excise tax rate on TIENs has been growing since January 1, 2021. 320% is an unprecedented increase in the history of Ukraine. In today's economic realities, no law-abiding business can survive a 320% tax increase at once without devastating consequences for the legal market. Therefore, the company is forced to reduce the number of stamps from the planned 50 million to 35 million in January 2021," Philip Morris said in a letter to the IMF mission.
The company reminded that in case of an increase in excise duty on TIENs not by 320%, but by 200%, the company could guarantee the state the purchase of excise stamps by at least 4.8 billion UAH in 2021 and 8.1 billion in 2022. But since the relevant legislative amendment was failed during Parliament hearings, the company is forced to revise plans for the volume of purchase of excise stamps for TIENs in a significant downward direction.
The company recognizes that this situation can create additional risks for the state budget revenues, and invites IMF missions to discuss the solutions.
Philip Morris Ukraine is the third-largest taxpayer in Ukraine, providing a total of UAH 17.3 billion in tax revenues, the first places are taken by Naftogaz Ukraine and UkrGasVydobuvannya.
On December 17, 2020, the Verkhovna Rada failed the amendment of the Committee on Finance, Tax and Customs Policy to mitigate the growth rate of excise duty on TIENs. The amendment provided for a 200% increase in excise duty plus 30% each subsequent year until 2025. 211 deputies voted in favour out of the necessary 226. Although the amendment was supported by 168 representatives of the "Sluga Naroodu" faction who were lobbying the amendment. As it was reported, the failure of the amendment may cost the state budget UAH 5 billion of income. About $200 million of FDI is also at risk.