Russia May Tackle Illegal Tobacco Trade by Adjusting Tobacco Tax Structure

Russia’s Ministry of Finance may redistribute tobacco tax revenue to local budgets in order to combat the illegal circulation of tobacco products.

According to a November 8 report from Russia’s TASS news agency, the Russian Ministry of Finance may consider reallocating part of the tax revenue from nicotine products to regional budgets. If this measure proves effective, the same approach may later be considered for tobacco products as well, in order to curb their illegal circulation in the regions.

This information was announced by Deputy Director Alexander Korobutov of the Ministry of Finance at a meeting of the Federation Council Committee on Economic Policy. He stated that the ministry currently has no objection to redistributing tax revenue from nicotine products. As for the tax allocation of tobacco products, a decision will be made after observing the practical results of the nicotine product tax redistribution. 

In June 2023, Russian President Vladimir Putin signed a law establishing comprehensive regulation of the tobacco market, including the import of such products into Russia. The law was designed to improve state oversight of the production and circulation of tobacco products, nicotine-containing products, and the raw materials used in their manufacture within the Russian Federation, and to establish dedicated control and supervision in this sector.