YEREVAN. - The new excise tax introduced in Armenia can increase the demand for inexpensive cigarettes (Winston, Camel and other brands), the executive director of JTI Armenia CJSC, Artak Ghukasyan, told Armenian News – NEWS.am.

In his words, the changes in the excise tax have to some extent become noticeable in cigarette business since May. The tax was raised from 5,000 till 5.5000 AMD for 1000 items (approx. $11.5-11.7) for filter-tipped cigarettes, and from 1400 to 1540 AMD (approx. $3.2 – 3.3) for cigarettes without filter. But most changes are expected to be made in the new Tax Code, under which the excise will turn from specific to ad valorem.

If there is a common tax for cigarettes now, regardless of being cheap or expensive, under the new Code, higher taxes will be imposed on expensive cigarettes. In other words, medium and high price cigarettes can get more expensive. In these cases the smokers usually don’t give up smoking, but simply shift to something cheaper. “We expect something like that – changes in the market structure,” Ghukasyan noted.

The Government was planning to operate the new excise since 1 January 2017. However, under the current legislation, when changing the new tax rates, the business must be given time for adaptation (at least six months should pass between the period of adopting the legislation and its entering into force). Since the Tax Code of Armenia was adopted during the first reading on June 15, the second and third readings being cancelled for the fall, it yet remains unknown from when the new ad valorem excise on cigarettes will take effect.