Economy 2021-07-15T05:23:31+03:00
Ukrainian news
Cigarette Manufacturers Considering Possibility Of Reducing Investment Programs In Ukraine Due To Introduction

Cigarette Manufacturers Considering Possibility Of Reducing Investment Programs In Ukraine Due To Introduction Of Trade Margin - Ukrtiutiun

investment, cigarettes, cigarette manufacturers, investment programs, trade margin, Ukrtiutiun

Cigarette manufacturers are considering the possibility of reducing their investment programs in Ukraine in connection with the establishment of a trade margin on cigarettes.

This is stated in a letter from the Ukrtiutiun Association to President Volodymyr Zelenskyy, Ukrainian News Agency reports.

"Given the systemic unpredictability of government policy regarding the regulation of the tobacco market, manufacturers are considering reducing investment programs," the letter reads.

The thing is that the Verkhovna Rada refused to cancel the decision to adopt bill 1049, which provides for the regulation of the trade margin on cigarettes.

In this regard, the Association asks Zelenskyy to apply the veto to the adopted law and return it for re-consideration by the Verkhovna Rada with a proposal to delete clause 2 of section 2 of the said law.

According to the member companies of the Association, the production of cigarettes in Ukraine in the context of the proposed distribution of income between the manufacturer and the trade enterprises becomes economically unjustified.

It is noted that in case of entry into force of these provisions, competition will be significantly limited both between manufacturers and importers, and between retailers, the proposed norm will also become an additional factor in the rise in price of tobacco products, and together with other factors, it will additionally stimulate the growth of illegal trade.

As Ukrainian News Agency earlier reported, on February 4, the Verkhovna Rada allowed Razumkov to sign a law introducing a single account for paying taxes, unified social tax and the trade margin on cigarettes.

In October 2019, the Verkhovna Rada introduced a single account for the payment of taxes and unified social tax.

Also, by adopting this bill, the Verkhovna Rada obliged manufacturers and importers of tobacco products to sell their products to wholesalers at prices not exceeding 80% of the established maximum retail price, including VAT and excise duty, by January 1, 2021.

The Ukrtiutiun Association believes that the decision adopted by the Verkhovna Rada will lead to an increase in cigarette prices by an average of 18% in 2020.

In December 2019, the Cabinet of Ministers signed a memorandum of understanding with manufacturers of tobacco products to ensure stability in the tobacco market.

The Memorandum, in particular, says about intentions to discuss changes in the methodology of administering a 5% tax on retail sales of tobacco products, develop proposals for licensing conditions for wholesale trade in tobacco products, and introduce a tracking system for the movement of tobacco products.