The Saeima approves a more moderate increase in excise duty on alcoholic beverages

(20.02.2020.)

As set out in the amendments to the Law on Excise Duties adopted on February 20 by the Saeima in the final reading, the increase of excise duty rate for alcoholic beverages planned for 1 March 2020 will be more moderate.

As of 1 March, the excise duty rate will increase on average by 5 %. Similar rise is planned for 2021 as well. As set out in the summary of the amendments, these rates, compared with the excise duty and VAT rates stipulated by the Tax Policy Guidelines adopted in 2017, will prevent approximately 6 million euro losses from the State budget this year and 27 million euro losses in 2021.

Iveta Benhena-Bēkena, Deputy Chair of the Budget and Finance (Taxation) Committee of the Saeima, which was responsible for the preparation of the amendments, noted that the initial excise duty rate for alcoholic beverages to come into force on 1 March would have resulted in a significant increase, which would reduce the industry’s competitiveness with other Baltic States. "These decisions should be pragmatic, justified and proportional. The amendments are important because data for the last quarter show a clear decline in domestic sales. This means it is necessary to react to Estonia’s excise duty policy," said Benhena-Bēkena, adding that the proposal for a more moderate rise of tax rates has gained support.

Amendments to the Law were proposed because, as of 1 March, the highest increase of excise duty rates would apply to liquors — 29.5 %, whereas the rate for beer, wine, fermented beverages with alcohol content up to 6 % by volume and intermediate products would on average increase by 10 %. According to the summary of the amendments, in case the described increase in tax rates were maintained, the planned budget revenue would fall by approximately 30 million euros each year.

For wine, fermented beverages with absolute alcohol content exceeding 6 % by volume and intermediate products with absolute alcohol content below 15 % by volume, as of 1 March the tax rate is to be set at EUR 106 per 100 litres. The initially planned rate was EUR 111. 

Regarding beer, the excise duty for every percent of absolute alcohol by volume is planned to be set at EUR 7.8 per 100 litres instead of the previous EUR 8.1, whereas for intermediate products with absolute alcohol content between 15 % by volume and 22 % by volume the planned tax rate is EUR 176 per 100 litres. Previously, this tax rate was set to be EUR 185.

As to other alcoholic beverages, the tax rate increase per 100 litres of absolute alcohol content would be EUR 1 642 instead of the previously planned EUR 2 025.

It is planned that the excise duty and VAT rates for liquors will be raised by EUR 0.38 per litre this year and by EUR 0.40 in 2021. For wine, the tax rates will increase by EUR 0.06 per 1 litre each year. Excise duty on beer would increase by EUR 0.03 per litre.

The amendments to the Law on Excise Duties will come into effect on the day following their promulgation.

 

Saeima Press Service

Piektdien, 29.martā