Harmonization of excise taxes on tobacco and alcohol products, common labeling principles are important steps towards further integration of the EAEU countries. The Ministry of Health opposed the harmonization of excise taxes in the EAEU Harmonization, unification, convergence of excise taxes on gasoline EAEU
The main topics of discussion at the meeting of the Eurasian Intergovernmental Council (EMCC), which was held in Minsk (Republic of Belarus) on November 27, were mechanisms for implementing the digital agenda of the Eurasian Economic Union (EAEU), draft agreements on the harmonization of excise taxes on alcohol and tobacco products of the member states. The heads of government also agreed to speed up the process of removing barriers.
The meeting of the Intergovernmental Council was attended by Acting Prime Minister of the Republic of Armenia Ararat Mirzoyan, Prime Minister of the Republic of Belarus Sergey Rumas, Prime Minister of the Republic of Kazakhstan Bakytzhan Sagintayev, Prime Minister of the Kyrgyz Republic Mukhammedkaly Abylgaziev, Chairman of the Government Russian Federation Dmitry Medvedev and Chairman of the EEC Board Tigran Sargsyan.
Chairman of the Eurasian Intergovernmental Council, Head of the Government of the Russian Federation Dmitry Medvedev said that the EAEU has achieved good economic indicators. Common markets are being formed within the parameters and areas provided for by the Treaty on the Union. The volumes of domestic and foreign trade are growing, which creates conditions for businesses to invest more actively in new projects. This, according to Dmitry Medvedev, increases the practical impact of integration. “In times of turmoil in international markets, the value of our integration association increases,” the Chairman of the Russian Government emphasized, “because we act according to uniform rules, we try to achieve common results, give the opportunity to develop our economies and businesses, and attract investments.”
Dmitry Medvedev also focused on the implementation of the digital agenda by the EAEU countries. “We have begun to create the foundations of the digital economy,” said Dmitry Medvedev. – This is one of the central areas of our work. Unlike other directions where you can move with at different speeds, along the “digit” you need to move synchronously. Otherwise, we will find ourselves on the margins and we will have to give up the benefits of the digital agenda.”
Chairman of the EEC Board Tigran Sargsyan noted that the meeting was fruitful and this will allow the EAEU to significantly move forward.
“We usually bring issues that require coordination of the positions of national governments to the level of prime ministers, where we have heated discussions. Today's agenda is no exception. Today, agreements have been reached on a number of conceptual issues regarding the formation of common markets for alcohol and tobacco products, which will allow us to promote these issues at the level of the EEC Board,” Tigran Sargsyan emphasized.
He informed that some of the issues considered will be reported to the presidents of the EAEU countries at a meeting of the Supreme Eurasian Economic Council, which will be held on December 6 in St. Petersburg.
The Intergovernmental Council instructed the EEC to develop a concept for the use of “regulatory sandboxes”. Currently, the EEC, together with the governments of the Union states, is forming regulatory framework to implement the digital agenda, while simultaneously launching initiatives and projects.
The Commission has already received 40 initiatives from businesses and authorities of the Member States for consideration, of which 8 have been supported and 14 are in progress. For example, a pilot project on digital traceability of goods has been launched, and a project on digital industrial cooperation is being prepared.
One of the mechanisms for implementing the digital agenda will be “regulatory sandboxes”. They represent special unified legal regimes that are agreed upon for each individual pilot project, are valid for a limited period and allow the model of project implementation and regulation to be tested in a controlled environment even before the adoption of the regulatory framework.
It is assumed that the use of special legal regimes will improve the quality of development of digital transformation initiatives, reduce the time interval from setting tasks to achieving practical results, and also reduce risks.
The most promising areas for the use of sandboxes are: pilot projects, such as transportation of goods via a single electronic accompanying document and others.
The parties also discussed the need to coordinate the interaction of competence centers for digital transformation.
The Intergovernmental Council was informed about the high degree of readiness of agreements on principles tax policy in the field of excise taxes on alcohol and tobacco products in the EAEU. Work on the formation of a common market for alcohol and tobacco products in the EAEU has been ongoing since 2015. To date, the level of the indicative excise tax rate has been agreed upon. To adapt business to potentially new requirements, the heads of government decided to postpone the application of the indicative rate from 2022 to 2024.
In addition, the parties agreed on a single range of deviation of the excise tax rate from the indicative rate, as well as on vesting the EEC Council with the authority to approve indicative rates and establish a consultative mechanism in the event of volatility in national currency rates.
Draft agreements on the principles of tax policy in the field of excise duties on alcohol and tobacco products of the EAEU states will be sent to the procedure for intrastate approval.
The Intergovernmental Council instructed the EAEU countries to take measures to remove barriers in the Union’s internal market. The heads of government of the member states reviewed the report on the work of the Eurasian Economic Commission to eliminate obstacles in the internal market of the Union in 2017–2018.
The governments of the participating countries were asked to take measures within three months aimed at eliminating barriers to the functioning of the internal market of the EAEU in accordance with previously adopted acts of the Commission, and to consider the results of the work done at the next meeting of the Intergovernmental Council.
The Intergovernmental Council approved an action plan to ensure stimulation of the production and use of wheeled Vehicle with electric motors for 2018–2020.
The Commission and the countries of the Union must work through and, if possible, ensure the implementation of these measures. They are divided into two blocks - production and use of electric vehicles. It is proposed to stimulate production by creating a Eurasian list of components for wheeled vehicles with electric engines, their basic components and charging and service infrastructure facilities not produced in the EAEU, reducing import rates customs duties
for imported components intended for the production of cars with electric motors, as well as the organization of cooperative production of electric vehicles. Among the measures to stimulate the use of electric vehicles in the Union is the exemption of owners of wheeled vehicles with electric motors from paying transport tax , providing them with free parking spaces
The EMPS adopted joint forecasts for the development of the agro-industrial complex, the balances of supply and demand of the Union countries for agricultural products, food, flax fiber, raw hides, cotton fiber and wool for 2018–2019. According to the forecast, in 2019 compared to 2016 in the Union as a whole, agricultural production in dollar terms will increase by 27.6%, the growth of mutual trade will be 34.5%, and exports to third countries will increase by 30%.
Consolidated forecast balances are formed for the main types of agricultural products and food, for example, grain, meat, milk and potatoes, as well as for the main types of agricultural raw materials for light industry, which include wool, flax fiber, leather raw materials and cotton fiber. Forecasts will be published on the EEC website in the near future.
The Intergovernmental Council decided to improve the procedure for informing about the development of measures industrial policy for sensitive goods. The decision supplements the Main Directions of Industrial Cooperation within the EAEU with a norm on maintaining and posting on the Commission’s website a register of legal acts adopted and developed by the Union states in relation to sensitive goods.
As a result, countries will receive complete information about the measures taken and planned to be taken government regulation And state support in relation to such products. This will prevent infringement of the interests of commodity producers in the EAEU countries.
Events were approved to celebrate the 25th anniversary of the Eurasian project and the fifth anniversary of the signing of the Treaty on the EAEU. 2019 marks the 25th anniversary of the idea of Eurasian integration and five years since the signing of the Treaty on the EAEU. The parties approved a plan of events to celebrate these anniversaries. Accepted program
The festive events are designed to raise awareness among citizens of the Member States about the development of Eurasian economic integration.
The next meeting of the Intergovernmental Council will take place at the beginning of 2019 in Almaty (Republic of Kazakhstan). (EEC) has prepared a draft agreement on bringing together excise tax rates on strong alcohol - vodka and liqueurs with a strength of over 9%. Harmonization of “alcohol” excise taxes should occur by 2022, and the average rate will be €9 per 1 liter of anhydrous. This roughly corresponds to the current Russian excise tax, which is equal to 523 rubles. Experts doubt that Armenia and Kyrgyzstan will agree on a document in this form - now the rate on strong alcohol in these countries is five times lower, and its sharp increase will lead to a proportional increase in alcohol prices.
The EEC has prepared a draft agreement on the principles of tax policy in the field of excise taxes on alcoholic products EAEU member states.
“Based on the results of the latest discussion of the draft agreement at the expert level, held in the EEC on December 13, 2016, it is proposed to establish an indicative rate for alcoholic products in 2022 in the amount of €9 per 1 liter of anhydrous ethyl alcohol and a range of deviations of actual excise tax rates for all countries,” - said in a letter from Deputy Minister of Finance Ilya Trunin to the Federation Council Committee on Budget and Financial Markets dated January 31, 2017.
The indicative rate is the average value from which each country can base itself when establishing its actual “alcohol” excise tax. Such a rate is established in a single currency for all countries, in in this case- In Euro. Taking into account the Central Bank exchange rate as of April 4, we are talking about an average rate of 539.1 rubles. The draft agreement provides for a range of physical deviations for Belarus, Kazakhstan and the Russian Federation of no more than 15% down and no more than 10% up. For Armenia and Kyrgyzstan - no more than 40% down and no more than 10% up, the deputy minister clarifies in the letter.
“At the same time, the Kyrgyz side has reserved a position on the range of deviations downwards,” he emphasized.
The draft agreement has already been approved by the EEC board. The document is planned to be considered at a meeting of the EEC Council, then it will be sent to the EAEU states for intrastate approval, the EEC clarified.
According to Art. 193 Tax Code in Russia, the excise tax for alcoholic products with a volume fraction of ethyl alcohol over 9% (except for beer, still and sparkling wines, etc.) is 523 rubles per 1 liter of anhydrous ethyl alcohol. This figure is relevant for both 2017 and 2018 and 2019.
Alcohol products with an alcohol content of over 9% provide the most significant revenue to the Russian budget compared to other alcoholic beverages. According to the Federal tax service(Federal Tax Service), in 2016 it paid 164.7 billion rubles in fees, in 2015 - 128.3 billion rubles. While total revenues from all alcoholic products amounted to 327.6 billion rubles in 2016, in 2015 - 271.2 billion rubles.
A source in the financial and economic bloc of the government noted that an additional tool within the framework of the ongoing work to harmonize excise taxes on alcohol products until 2022 will be joint annual consultations on the rates planned by the member states of the union to be established in the relevant tax periods.
The harmonization of rates is intended to ensure equalization of the operating conditions of the alcohol market in the EAEU member states and a reduction in the “gray flow” of alcohol, including to the Russian Federation, he emphasized.
Director of the Center for Research of Federal and Regional Alcohol Markets (CIFRRA) Vadim Drobiz emphasizes that it is impossible to create a common market for the trade of strong alcohol within the EAEU solely through a single rate on alcoholic beverages until the automated accounting system for the alcohol market EGAIS is extended to other countries of the union . He doubts that Armenia and Kyrgyzstan will agree on a document in this form, because “now the rate on strong alcohol in these countries is five times lower than the domestic rate.”
The large difference in excise taxes provides a significant price gap for the final product. For example, “Green Mark” vodka in Kyrgyzstan costs 157 rubles, in the Russian Federation - 571 rubles.
The “new” concept of harmonization proposed by the EEC and supported by the member states of the EAEU is an alternative to the previously proposed scheme of annually fixing rates for member states in the agreement and is most consistent with the concept of “tax sovereignty of the state,” noted Izvestia’s source in the government. Countries were also expected to define mechanisms for administrative cooperation between their competent authorities.
“In the opinion of the Russian Ministry of Finance, fixation of excise tax rates actually established by each member state of the EAEU cannot be considered as an instrument to ensure convergence of the level of these rates,” says the letter from Rosalkogolregulirovanie to the Russian government dated October 19, signed by the head of the service, Igor Chuyan.
The Ministry of Industry and Trade noted that they support the initiative to harmonize excise tax rates on alcohol in the countries of the Customs Union.
The Ministry of Economic Development did not provide comments, clarifying that the issue falls within the competence of the Ministry of Finance. The Ministry of Finance did not respond to Izvestia’s request.
On November 27, 2018, a meeting of the Intergovernmental Council of the EAEU was held in Minsk, which brings together the heads of government of the union countries (with the exception of Armenia, which is represented at the level of First Deputy Prime Minister). Besides current state of the Eurasian project, excise taxes on alcohol and tobacco, internal barriers and the production of electric vehicles were discussed. One of the pressing issues was the current import customs duties in the EAEU: for example, President of Belarus Alexander Lukashenko said that he would not support their extension, since it is not beneficial for his country. Instead, Minsk proposed revising import duties every three years, focusing on the volume of imports from participating countries.
Trade is growing
The EAEU is showing good results this year economic development. Based on the results of January-September this year, the volume of mutual trade, as Russian Prime Minister Dmitry Medvedev said at the meeting, increased by approximately 13.5-14%. Moreover, 90% of the products traded among the EAEU countries are produced on their territory. The volume of foreign trade grew faster than domestic trade, increasing by 22% over 9 months. The increase in foreign trade was mainly due to an increase in exports, which also grew faster than imports.
Among the main tasks of Eurasian integration, Medvedev highlighted the formation of a common financial market, common markets for gas, oil and petroleum products, digital transformation of the union economies, as well as the implementation of the system electronic marking and traceability of goods, an agreement on which was signed in February of this year.
For Russia, which suffers more than other EAEU countries from “gray imports” and smuggling, the introduction of this system is especially important. According to the latest data, the share of illegal imports in the trade of Kazakhstan and Kyrgyzstan with China is 52.7-62.8%, and it is sent primarily to Russia.
How to divide duties
For Belarus, which hosted the summit, one of the key issues was the distribution of import customs duties. Since the EAEU has a common customs space, revenues from duties are divided among all five countries of the Union. In accordance with the latest version of the agreement, adopted in connection with the accession of Kyrgyzstan to the Treaty on the EAEU, the standards for the distribution of import customs duties are as follows: Armenia - 1.22%, Belarus - 4.56%, Kazakhstan - 7.055%, Kyrgyzstan - 1, 9%, Russia – 85.265%. Currently, this protocol has been extended until the end of 2019.
Since it has not yet been possible to agree on a new mechanism for distributing revenue from duties, the easiest way is to extend the existing mechanism. But Belarus is not happy with this option.
“...This topic was discussed for a long time at the Supreme Council on May 14 in Sochi,” Alexander Lukashenko told the heads of the union governments. “The heads of state agreed that the finance ministers, and then you, will work on the methodology for distributing duties by December and report on the results. The proposal to once again extend the terms of existing regulations... is absolutely unprofitable for Belarus. Of course, we cannot support, as our government informs me.”
Barriers and excise taxes
There was also a discussion of the topic of eliminating internal barriers, which is a constant background for discussions on mutual trade issues. According to Lukashenko, there were cases when some barriers were removed, and new ones were immediately erected in their place. This situation has developed, for example, with regard to exemptions from national treatment in the field of public procurement, which was originally intended as an exceptional measure.
Having considered the report on the EEC’s work to eliminate obstacles in 2017–2018, the heads of the union governments proposed that the EAEU countries take measures to eliminate internal barriers within three months and consider the results of these measures at the next meeting of the Intergovernmental Council.
In addition, the EAEU countries are closer to signing an agreement on the principles of levying excise taxes on alcohol and tobacco products, which is at a high stage of readiness. In particular, it was possible to agree on the level of the indicative excise tax rate - the average value for all EAEU countries, from which they can build on when setting excise tax rates at the national level. Currently, excise taxes on tobacco and alcohol in the union states differ by an order of magnitude, which, in the absence of customs borders, has led to widespread illegal supplies. At the same time, the deadline for applying the indicative rate for more successful business adaptation was postponed from 2022 to 2024.
Eurasian electric car
As a result of the Minsk meeting, decisions were also made that relate to individual industries.
Thus, the Intergovernmental Council approved a plan to stimulate the production and use of the most environmentally friendly type of transport - electric vehicles.
Their production is planned to be developed through the formation of a Eurasian list of components and their basic components that are not produced in the EAEU countries, the organization of cooperative production and the reduction of import duties on imported parts. Owners of electric vehicles will be encouraged through vehicle tax exemptions and free parking spaces equipped with chargers. This issue is especially relevant for Belarus, which has already announced the launch of the production of electric vehicles, as well as the development of the corresponding infrastructure.
It was decided to hold the next meeting of the Intergovernmental Council at the beginning of 2019 in the old capital of Kazakhstan - the city of Almaty.
Comparative analysis of VAT and excise tax rates in the EAEU countries Performed by: Ellina Semenchuk, Dina Yakovleva Group TS 02/1501
On May 29, 2014, in Astana, the presidents of Russia, Belarus and Kazakhstan signed an agreement on the creation of the Eurasian Economic Union (hereinafter referred to as the EAEU). On January 2, 2015, Armenia became a full member of the Union, and on August 12, 20015, Kyrgyzstan. The agreement came into force on January 1, 2015.
Current tax rates of the countries of the Eurasian Economic Union Type of tax Tax rates in the countries of the EAEU Russia Belarus Kazakhstan Armenia Kyrgyzstan 0%, 10%, 20% Reduced rates: 0, 5%, 9, 09%, 16, 67% 0%, 12% 20 % 0%, 12% VAT 0%, 18% excise tax Depending on the type of excisable goods, fixed and ad valorem rates
Excise tax payers Russia Organizations, individual entrepreneurs, persons recognized as taxpayers in connection with the movement of goods across the customs border of the Eurasian Economic Union, determined in accordance with the law of the Eurasian Economic Union and the legislation of the Russian Federation on customs affairs. individual entrepreneurs, Belarus Organizations, individuals. Kazakhstan Individuals and legal entities Kyrgyzstan An entity that produces, including on a toll basis, excisable goods on the territory of the Kyrgyz Republic and/or imports excisable goods into the territory of the Kyrgyz Republic. Armenia Legal entities (including those registered in in the prescribed manner in the Republic of Armenia representatives and branches of foreign legal entities) and individuals.
Excise tax rates of the EAEU member countries EAEU countries Beer, per 1 liter Cigars, per 1 piece Gasoline, per 1 ton Currency rates of the EAEU countries Currency of the Russian Federation 21 rubles - 171 rubles - 13100 rubles - Belarus 3500 Belarusian rubles 11, 80 30800 Belarusian rubles 103 , 80 3515800 Belarusian rubles 11848, 46 Kazakhstan 26 tenge 5, 18 750 tenge 149, 56 0 tenge 0 Armenia 70 drams 9, 50 1500 drams 203, 80 32500 drams 4415, 76 Kyrgyzstan 30 soms 29, 10 100 soms 97.13 5000 soms 4783, 57 Russia
Dynamics of excise tax rates on diesel fuel of the EAEU countries Excise tax rate on diesel fuel per 1 ton 2010 Country Currency of the EAEU member rates of the EAEU countries Russia - 2013 Currency of the Russian Federation Currency of rates of the EAEU countries 2016 Currency of the Russian Federation 1188 - 5860 Belarus 751383 Belarusian rubles 2532, 21 991800 Belarusian them rubles 3342.43 Kazakhstan 0 tenge 0 Kyrgyzstan 800 soms 777.04 Armenia 27000 drams 3668.41 32500 drams 4415.76 Currency of rates of the EAEU countries - Currency of the Russian Federation 13332 2270000 7650.0 Belarusian 5 their rubles 0 tenge ge 0 800 soms 777.04 35000 drams 4755.4 3
Base rates of growth of excise tax rates on diesel fuel 1200. 00 1122. 22 1000. 00 800. 00 600. 00 400. 00 302. 11 200. 00 100. 00 Russia Belarus 129. 63 Kyrgyzstan Armenia
Dynamics of excise tax rates on filter cigarettes of the EAEU countries Excise tax rate on cigarettes, 1000 pieces 2010 Member country Currency of the EAEU rates of the EAEU countries Russia Belarus - 2013 Currency of the Russian Federation Currency of the rates of the EAEU countries 205 - 2016 Currency of the Russian Federation Currency of the rates of the EAEU countries 550 - Currency of the Russian Federation 1200 60000 Belarusian x rubles 202.20 180600 Belarusian x rubles 608.63 390000 1314.33 Belarusian x rubles 1000 tenge 198.80 1960 tenge 389.66 5000 tenge 994.04 Kyrgyzstan 80 soms 77.67 1 20 soms 116.50 750 soms 728.16 Armenia 5000 drams 679.35 5500 drams 747.28 Kazakhstan
Base rates of growth of excise tax rates on cigarettes 1000 937, 5 900 800 700 650 585, 37 500 400 300 200 110 100 0 Russia Belarus Kazakhstan Kyrgyzstan Armenia
v. Unified definitions of excise tax levied this type payment by all participating countries, performs the same functions (fiscal and regulatory), has the same features and is charged according to specific tax rate. v. The differences lie in the payers of this indirect tax, the composition of excisable goods and the rates on them are different. v. However, the EAEU member countries have planned to harmonize excise tax rates on alcohol and tobacco products for the period 2014-2020, which is already beginning to be seen a little.
Page Content
The Board of the Eurasian Economic Commission (EEC) decided to send the draft Agreement on the Labeling of Goods for domestic approvalmeans of identification in the Eurasian Economic Union (EAEU). The document prepared by the Commission’s working group was sent to the governments of the Union countries. Subsequently, after approval by the EEC Council, the agreement will be proposed for acceptance and signing by the heads of government of the member states. It is expected that it will be signed before the end of 2017.
When developing the draft agreement, special attention was paid to creating conditions for protecting consumer rights, as well as human life and health, and ensuring the legal circulation of goods on the territory of the EAEU. The document defines the main marking mechanisms and ensures the implementation of the principle of traceability of goods circulating in the customs territory of the Union. Exactly which goods will fall under its scope will be decided later at a meeting of the EEC Council.
In accordance with the proposed draft agreement, goods must be marked with identification means unified within the EAEU, information about which will be entered into single register. The EEC must form and maintain the register.
Earlier, the Commission, within the framework of a special working group with the participation of the leadership of the authorized departments of the Union, held a meeting at which the key approaches and principles for the development of a system for marking goods by means of identification were discussed (see: ). In particular, general requirements identification means should include their machine readability and technological compatibility (interreadability).
The EEC Board approved the draft order of the EEC Council, which will define certain provisions of agreements governing the principles of tax policy of the EAEU member states in the field of excise taxes on alcohol and tobacco products. In particular, it is proposed to give the EEC Council the authority to approve indicative excise tax rates on alcohol and tobacco products, as well as ranges of deviations from them. Calculation of indicative rates will be carried out taking into account the exchange rate of the euro to the corresponding national currency of the Union state applied when budget planning for the next calendar year.
It is assumed that the package principle will be applied - agreements regulating the principles of tax policy of the EAEU member states in the field of excise taxes on alcohol and tobacco products should come into force simultaneously with the Agreement on the Regulation of the Alcohol Market within the Union.
Indicative rates and deviation ranges will be approved every five years for a period of one year starting in 2022.
The adoption of agreements will be an important step towards creating a single market for alcohol and tobacco products in the EAEU through the harmonization of excise tax rates.