Ukraine: Volodymyr Zelensky signs law on increasing excise taxes on tobacco

President Volodymyr Zelensky signed Law No. 11090 on increasing the excise tax on tobacco products, enacted on March 24, 2025.[1]The new legislation provides for a gradual alignment of Ukrainian tobacco product taxation with that of the European Union.

Ukraine raises excise rates on cigarettes and aligns them with the euro

The law stipulates that the excise tax on cigarettes will now be linked to the euro's performance, rather than the hryvnia's. From January 2028, new excise rates on tobacco products will come into force, incorporating a minimum collection rate set by Council Directive 2011/64/EU.

There will be a sharp, then moderate increase in these rates for tobacco, a one-time increase for vaping devices, and slight rate increases for heated tobacco products. By 2028, the excise tax will gradually increase annually—the cost of a pack of cigarettes will rise by about 40 hryvnias, or about 0.89 euros.

The Ukrainian parliament, the Verkhovna Rada, approved the bill as a whole in early December 2024. The decision was supported by 237 parliamentarians.

Voice MP Yaroslav Zheleznyak expressed regret that the bill's signing had been delayed. He said the delay had resulted in a tax shortfall of 2.1 billion hryvnias for the Ukrainian budget since January 1 of this year, or approximately €46.9 million.[2].

A desire to align with European tobacco legislation

As explained by the Chairman of the Committee on Finance, Taxation and Customs Policy, Danylo Hetmantsev, the adoption of the draft law will allow harmonizing the tax legislation of Ukraine in the field of excise duties on tobacco products with the current standards of EU legislation, a harmonization necessary for the implementation of the Association Agreement.[3].

In accordance with the provisions and good practices of the WHO Framework Convention on Tobacco Control, the FCTC, Ukraine has already passed Articles 10 and 10-1 of Law No. 1978-IX prohibiting the sale of cigarettes, rolling tobacco, electronic cigarettes, flavored liquids, and, later, heated tobacco.[4]. In addition, the law also prohibits a number of additives, such as vitamins, in tobacco and vaping products.

Issues that are also ethical

This decision comes as Ukraine is paying a heavy price for smoking, with nearly 130,000 premature deaths attributable to it, and as the country has received hundreds of thousands of free packs from one of the international tobacco companies, which has remained anonymous, a source close to the matter arguing that smoking " poses a smaller threat to these brave soldiers than fighting Putin's illegal invasion of their country »[5].

However, since Ukraine's ratification of the WHO Framework Convention on Tobacco Control, the government has embarked on a strong policy in this area. In terms of taxation, it has increased the price of a pack of tobacco 27-fold in ten years, simultaneously increasing tobacco-related tax revenues 12-fold, while reducing the number of smokers by 40%.

The weight and role of tobacco manufacturers in Ukraine goes beyond the health consequences for Ukrainians. Their role in financing Russia through their activities is not insignificant. Philip Morris International and Japan Tobacco International had expressed their desire to withdraw from the Russian market following the invasion of Ukraine.[6]However, these two tobacco giants ultimately decided to remain present, citing the financial repercussions of a withdrawal. Russia remains a profitable market for PMI, particularly thanks to the success of heated tobacco devices. For its part, JTI justified its decision by pointing out that Russia represented 20 billion TP3T of its profits, highlighting the consequences this could have for its investors.

These economic choices are attracting growing criticism. Ukrainian authorities and various NGOs denounce the tobacco industry's involvement in indirectly financing the war in Ukraine. Indeed, tax revenues from tobacco are a key source of income for the Russian state, which it uses to finance its war effort.

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[1]Mohylevets Anastasiia, Volodymyr Zelensky signed a law on increasing the excise tax on tobacco, Babel.ua, published March 24, 2025, accessed March 25, 2025

[2]Shramko Julia, Zelenskyy signed a law on increasing the excise tax on tobacco products, UNN, published March 24, 2025, accessed March 25, 2025

[3]Perepechko Iryna, The Verkhovna Rada generally supported the increase in the excise tax on tobacco, Babel.ua, published December 4, 2024, accessed March 25, 2025

[4]Tobacco-free generation, Ukraine: Ban on flavored tobacco and vaping products, published July 18, 2024, accessed March 25, 2025

[5]Tobacco-free generation, UK hands out free cigarettes to Ukrainian soldiers, published April 25, 2024, accessed March 25, 2025

[6]Tobacco-free generation, Tobacco multinationals: persistent links with Russia and Belarus despite their public announcements, published December 18, 2024, accessed March 25, 2025