The government of Armenia, at its Cabinet meeting today, has initiated a legislative initiative proposing to revise the excise tax rates for goods subject to excise tax.

As a result, the prices of cigarettes, alcohol, diesel fuel, and gasoline will increase in the country. Accordingly, the government has approved the draft law on amendments to the Tax Code, the purpose of which is to revise the excise tax rates set for goods subject to excise tax, increase the tax on indirect taxes, ensure additional tax revenues, harmonize excise tax rates within the framework of cooperation in the Eurasian Economic Union (EAEU) tax policy and administration, as well as to index the excise tax rates for goods subject to excise tax due to the forecasted price growth in the coming years.

The draft law proposes to revise the excise tax rates set for goods subject to excise tax in Armenia. In particular, due to the forecasted inflation in the coming years, to index the excise tax rates for goods subject to excise tax, setting the coefficient for each year at 3 percent. It is planned to increase the excise tax rates on tobacco products by 7 percent each year, on heated cigarettes by 30 percent each year, on electronic cigarettes by 100 percent in the first year, then by 25 and 20 percent in the following two years, on hookah tobacco by 40 percent in the first year, then by 30 percent each year in the following two years.

In order to stimulate the production of fruit vodkas, mitigate the high cost of fruit vodkas due to the cost of raw materials, and develop the sector, the current excise tax rate in Armenia on fruit vodkas is planned to be reduced by 33 percent, taking into account the fact that administrative capacities have developed and the results of laboratory examination make it possible to determine whether the given product is actually made from fruit and berry raw materials.

And in order to promote brandy production and viticulture on Armenia, it is proposed to set the excise tax rate on brandy at 4,000 drams per 1 liter—recalculated as 100 percent alcohol, regardless of age group.