Harmonization of excise legislation: the key to attracting investments to Ukraine

Ukraine should adapt its excise legislation on tobacco products to EU standards to create favorable conditions for investment and competition in the European market. This was stated by the general director of the Philip Morris company in Ukraine Maksym Barabash during the conference of the European Business Association "Ukraine on the way to the EU".

According to Barabash, currently the main obstacle for attracting significant investments is the lack of harmonized excise legislation, but steps in this direction are already being taken. The Ministry of Finance of Ukraine is aware of the need to fulfill its obligations to the European Union, and the corresponding bill has already been registered in the Verkhovna Rada. This document aims to fully harmonize excise regulations with EU requirements.

Barabash noted that Ukraine should not invent new approaches to taxation, but simply implement existing European practices. In particular, this concerns the taxation of tobacco products for electric heating (TVEN). It is important to adhere to the minimum excise duty rates on cigarettes established by the EU — 90 euros per 1,000 pieces — and to implement a uniform methodology for determining the exchange rate of the euro to the hryvnia throughout the year.

According to the general director of Philip Morris, it is especially important to introduce differentiation of excise rates between traditional cigarettes and TWEN, as is done in the EU countries. He reminded that Ukraine remains the only country in Europe where these rates are the same, while in the European Union the difference between them is approximately 66%.

Barabash emphasized that the harmonization of excise legislation will make Ukraine much more attractive for investments by large international companies. This will create favorable conditions for attracting new capital investments and development of the industry. He also noted that at the global level, Philip Morris operates in 180 markets, where each country competes for investment.

In the context of Ukraine's future accession to the EU, the country will face the need to compete with other EU states, such as Poland and Romania, which already have a developed system of taxation and investment attractiveness. For successful competition, Ukraine needs to bring its legislation into line with European standards.