The main operators of the tobacco market in the Republic of Moldova have published an address to the state leadership of the country in which they express their concern regarding the proposal of the Ministry of Finance to increase the excise duty on tobacco products by 25% for the year 2023. The companies say that the sudden increase in the excise duty will have negative consequences for the state budget and the legal market, writes Infotag.
Philip Morris International, Japan Tobacco International, Acvilin Grup, Business Market – are the main operators of the tobacco products market, whose contribution represents about 95% of the revenues to the state budget from the excise tax on tobacco products and 7% of the total revenues of the state budget.
In the address to the operators, it is mentioned that the Republic of Moldova has a fiscal calendar for the years 2021-2013 that foresees a 15% increase in the excise duty on tobacco products. The proposal of the Ministry of Finance to increase the excise duty by 25% goes against the existing fiscal calendar.
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“The proposed rates represent a significant acceleration of the rate of growth of excise taxes with foreseeable negative consequences for the operating environment, which will affect the legal market and companies that operate legally in the Republic of Moldova, will stimulate the growth of illicit trade and will decrease budget revenues respectively” , the companies’ statement says.
The operators claim that there is an increased risk of cheap tobacco products from Ukraine invading the market of the Republic of Moldova.
“Once again, we reiterate our position that any increase in excise duty must be gradual and moderate. The practical application of these mechanisms will ensure the predictability of tax revenues to the state budget, will determine the stabilization of the situation on the market of tobacco products and will contribute to the effective implementation of state regulatory policies in the field”, the statement added.
Until now, the Republic of Moldova has had a moderate but balanced schedule of excise tax rate increases for all tobacco products, which foresees an average excise tax increase of 15%. This approach ensured the Government sustainable and stable budget revenues of around 11% annually, but also predictability for economic operators and the maintenance of illicit trade (smuggling and counterfeiting) at low levels.