According to a survey by a Russian vape alliance, 98% of vapes are illegal goods, and it is expected that the excise tax revenue from vapes will be almost zero in 2024.
98% of vapes are illegal Excise tax on tobacco oil may be completely lost by 2024
According to RIA reported on September 30, a study by the Union of nicotine-containing Products Enterprises (S P N N N) showed that every Russian study shows that only one vape in 50 is reasonable, which leads to a very low tax levy.
The agency noted that the proportion of illegal production (sale) of vaping oil and vape tar delivery systems (ENDS) containing tobacco tar in Russia exceeds 99%. In other words, only 1 out of 50 vapes sold in Russia is currently justified, and excise taxes are only paid in the budget.
SPINI estimates that the excise tax on e-liquids will be “close to zero” in 2024. According to data from the Ministry of Finance, the agency noted that from June to August 2024, Russian manufacturers producing these vaping oils did not pay any excise taxes, while Russian manufacturers paid 211.9 million rubles ($2.25 million) in excise taxes on e-liquids in 2023.
SPINI’s representative also mentioned that an excise tax of 2.2 million rubles ($23,000) per kilogram of tobacco and tar raw materials will be imposed from January 1, 2025. This year, the excise tax containing tobacco and tar is 42 rubles ($0.45) per milliliter. According to preliminary calculations, the government expects to collect 50 billion rubles ($500 million) in excise taxes from e-vape, but the amount is described by the agency as “difficult to achieve.”
Chairman Vladimir Mishelovin stressed that:
- “The current state of the industry has been described as completely ‘black’ (illegal). If customers are unwilling to pay for legal goods, the state could lose excise revenue from tobacco and tar raw materials altogether. Apart from a loss of more than 148 billion rubles (about $1.6 billion) in 2023, the government budget in 2024 will basically have no revenue. The situation is critical. To avoid the market going completely underground, it is necessary to re-examine the state regulation of the vape market and tobacco oil. It is necessary to find a way to ensure reasonable excise tax collection on tobacco and tar raw materials and products.”
