Kazakhstan Increases Tobacco Duties

by Tatiana Smolenskaya, Tax-News.com, Moscow

15 November 2010

The Kazakh parliament has approved a bill which will raise substantially the excise tax levied on cigarettes..

The Kazakhstan senate (upper house) has completed a second, final, reading of the law "On introducing amendments and addenda to some legislative acts of the Republic of Kazakhstan on issues of taxation"

The tax will rise 25% each year between 2011 and 2014 – from 20% of the pack price now to 49% in four years. Last year smoking in some public places, especially restaurants and bars was banned, and advertisements for tobacco products have been banned since 2007.

Promoters of the legislation claim the rise still falls short of the 54% levied in Russian and the 75% rate in many developed countries, and state that it would be appropriate to bring the level up to that of Russia's in the spirit of the common market that is to be established with Russia and Belarus in 2012.

Olzhas Bibanov, a spokesman for Japan Tobacco International, pointed out to Central Asian Newswire that "knock-offs" from neighboring China could become a serious problem as China was not only the world’s largest consumer of cigarettes – 2.5 trillion a year – but also the biggest producer of counterfeit cigarettes – 300 billion a year. Cigarette consumption in Kazakhstan has risen to an average of eight per day per person.

A Majilis (parliamentary) committee had earlier decided not to include in this bill proposals to introduce a progressive scale of rates on individual income tax and other issues not directly related to the budget.

However, according to newskaz.ru, the bill did include provisions to reduce fees for use of third and fourth generation mobile communication, exempt gold trading from VAT, and zero-rate VAT on aviation fuel.

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