Cigarette and alcohol prices to increase in 2017 – Higher excise taxes per EU request

Judging by the request made by the European Union, the excise taxes on distilled beverages and cigarettes will increase starting with the New Year, as Blic learns.

– The Ministry of Finance has already formed a working group which should prepare a new law aiming to bring the Serbian excise policy for this type of merchandise in line with the EU standards. If the instructions from Brussels are followed closely, the charges for locally-produced brandy and whiskey should be equal, that is, our drink will have to become more expensive by RSD 192 per liter. In other words, the current excise tax on Serbian plum brandy will rise from RSD 124 to RSD 316, the amount paid for a liter of imported whiskey. This drastic change is the result of the warning by the EC, which believes that the excise policy in the sector of distilled beverages favors local alcoholic drinks, which violates the Brussels principles.

The Blic source from the government says that Brussels' unwavering stance means that the excise policy regarding brandy, but also cigarettes, will almost certainly need to be changed.

– Unlike the drastic increase regarding brandy, excise taxes on cigarettes will increase gradually, in line with the four-year plan which is to be prepared. Like the previous one, it envisions corrections twice a year. In the EU, the minimum excise tax on 1,000 cigarettes is EUR 90, whereas, in Serbia, it is EUR 50. The difference needs to be erased in the years to come. It should also be noted that, in Serbia, both the specific and progressive excise taxes are paid on cigarettes. The specific tax currently stands at RSD 58.5 per pack, and the progressive one is 33% of the retail price – the interviewee explains.

He adds that the unpopular measures are a prerequisite for opening chapters 16 and 29.

The Ministry of Finance has indirectly confirmed to us that the said change is to come about.

– The plan is for amendments regarding excise taxation of alcoholic drinks in line with the EU standards to be carried out through amendments of the Excise Tax Law. Considering that the current legal solutions regulating the taxation of alcoholic drinks has been arranged differently from what the EU standard envisions, it is necessary to define the deadline within which the solutions are to be adequately implemented – the Ministry says.

Brandy producers angry

Local brandy producers do not approve of this move.

– If this happens, and there are indications that it will, legal producers will turn into illegal ones. Due to fees, 2,000 alcohol producers have been erased from the register in the past two years. If this motion is adopted, the state will have to provide incentives for the production of local brandies, as they are Serbia's brand in the world – says Ljubisa Zirovic, brandy producer.

Ministarstvo finansija Republike Srbije

excise taxes

excise taxes on cigarettes

excise taxes on alcoholic drinks

Excise Tax Law

Ljubisa Zirovic