Why Cigarettes Are Getting More Expensive In Belarus, How Much They Will Cost Next Year?

Prices are rising almost monthly.

Almost monthly prices for cigarettes in Belarus are rising - from January to September this year, their cost increased by an average of 45.2%. Myfin.by found out why it happens and how much cigarettes will cost next year.

What makes up the cost of cigarettes?

Each manufacturer or importer of tobacco products has the right to set the maximum retail price of cigarettes, above which they can't cost in Belarus. The minimum retail price is 85 per cent of the maximum price. Information on changes in retail prices is submitted monthly to the Ministry of Taxes and Levies and published in the media.

The retail maximum is based on the selling price of cigarettes, including the cost of production and profit of the manufacturer or importer, various trade mark-ups, including excise duty and value added tax.

Thus, two key factors influence the regular increase in cigarette prices - the increase in the selling price of the product and the increase in the excise duty.

How and Why Tobacco Excise Duty Increases

There are two price groups of filtered cigarettes in Belarus, and for each of them the new edition of Appendix No. 1 of the Tax Code stipulates its own cost criteria. Now the first group includes tobacco products, the retail price of which from 1 October to 31 December 2023 does not exceed Br235 per 1,000 pieces. That is, a pack of 20 cigarettes of the first category can not cost more than 4.7 rubles at retail. The second price group includes cigarettes for which the price per pack is set above 4.7 rubles from 1 October to 31 December 2023.

Each price group of cigarettes has its own excise duties.

Thus, until the end of the year it is necessary to pay 95.59 rubles of excise duty from 1000 cigarettes of the first category. That is, the cost of a pack of 20 cigarettes with filter, which is sold at retail for an amount not exceeding 4.7 rubles, includes 1.91 rubles of excise duty. For second price category cigarettes, the excise duty is 147.03 roubles. This means that the cost of a pack of 20 cigarettes, which is sold more expensive than 4.7 rubles, includes 2.86 rubles of excise duties.

The growth of excise duties on cigarettes in Belarus is regulated by the treaty with Russia on general principles of taxation on indirect taxes, designed to ensure equal competitive conditions for economic entities of the two countries.

According to the document, excise duty for the first price group of cigarettes in Belarus will amount to Br2705 per 1,000 pieces of tobacco products in 2024 (now the amount of excise duty is equal to Br2254 Russian rubles). For the second price group in 2024, the excise duty will amount to Br3606 per 1,000 cigarettes (now it is Br3,467). In Russia, by the way, for all types of cigarettes and papyri, excise duty next year will amount to 3606 Russian rubles per 1000 cigarettes.

The Changes in the Cost of Cigarettes in 2023

If you analyse the data on the maximum retail price submitted to the Ministry of Taxes and Levies by manufacturers and importers of tobacco products, it turns out: the largest increases in the cost of cigarettes occurred on January 1, April 1, July 1 and October 1 of this year. It was on these days that excise duties changed. On December 1, the prices of cigarettes in Belarus will rise again. About 30 types of tobacco products of various brands will go up in price.

At the same time, manufacturers and importers increased the retail price of some types of cigarettes on their own.

Thus, Hrodna tobacco factory "Nioman" raised the maximum retail price by 20-30 kopecks for more than two dozen brands of filter cigarettes, including some types of Rothmans, Vogue, Kent, Pall Mall, in February this year. In May, the factory increased the retail price of only one type of cigarette - Kent Crystal Blue (by 5 kopecks), and from 1 August increased the price of some types of Pall Mall, Kent and Vogue by 30 kopecks. The next price hike from 1 September affected about 60 cigarette brands, including Magnat, Minsk, Premier, Fast, Dove, Credo and NZ, with prices rising by 5-10 kopecks.

The Tabak Invest company increased prices for its products 6 times during the year. Since March 1, on average, 64 brands of cigarettes, including some types of Korona, Fort, Monte Carlo, LD, Camel, Winston, Richmond, Sobranie, went up in price by 10-30 kopecks. In May, the increase in prices for some types of cigarettes: Korona, Fort, Monte Carlo, LD, Camel, Winston, Richmond, Sobranie and Kent ranged from 2 to 30 kopecks. At the same time, Winston Compact Flash Mix of this manufacturer became 15 kopecks cheaper. Since June 1, 4 types of cigarettes - Winston, Monte Carlo, Camel and Sobranie - went up in price by 15-30 kopecks. The next increase in price, on August 1, affected some types of cigarettes Kent, Vogue, Camel and Richmond, which became more expensive by 30 kopecks, and from September 1, the prices of another 25 types of products increased by 5-25 kopecks. The next price increase, on November 1, affected 18 types of Winston and Sobranie cigarettes, the prices for which increased by 30 kopecks.

The Inter-Tabacco company raised prices for its products twice. On August 1, such brands of cigarettes as Dove, Red Bor and RB Perliamutr went up by 20-30 kopecks, while on September 1, the prices of another 20 types of products increased by 20-25 kopecks.

The state enterprise of Belarustorg increased the price of imported Kent Crystal Blue cigarettes by 5 kopecks from May 1, while from August 1 - of Dunhill and Kent, which became more expensive by 30 kopecks. The next increase in price occurred on September 1 and affected some types of Chapman cigarettes, the price of which increased by 30 kopecks.

What to expect in the tobacco market in 2024?

From January 1, excise duty for products of the first price group increases by 20% and will be 2.29 rubles per pack. Thus, regardless of price increases by manufacturers and importers, the cost of cigarettes in the category up to 4.7 rubles will increase by at least 30 kopecks.

The excise duty for products of the second price group will increase by 4 per cent and will amount to 2.97 rubles. This means that regardless of price increases by manufacturers and importers, the cost of cigarettes, which are now sold above 4.7 rubles, will increase by 11 kopecks.