Ukrainian Tax Service Warns of 2 Billion Hryvnia Revenue Loss from Proposed Nicotine Cap.

Risk Assessment of Draft Law No. 14110-d

According to TSN.ua: The State Tax Service of Ukraine has analyzed the potential financial fallout from the adoption of Draft Law No. 14110-d. This legislation proposes capping the nicotine content in tobacco products at 1 mg per serving. According to the agency's assessment, should the law pass, excise tax revenue from the tobacco sector could plummet by up to 2 billion hryvnias in 2026. This comes at a time when Ukraine's budget is under significant strain due to the ongoing war with Russia.

After reviewing proposals from the Ukrainian Association of Tobacco Product Manufacturers, the State Tax Service expressed serious concern about the potential consequences. The agency stated:

'Implementing a nicotine content limit of 1 mg per serving… creates a risk of reduced excise tax revenue due to the prohibition of products containing nicotine above this threshold.'

Consequently, the Tax Service has recommended that this specific nicotine restriction be removed from the draft law entirely.

Business Community's Stance

The business community has also voiced strong opposition to the proposed measure. Natalia Fesiun, a representative, argued:

'A 1 mg nicotine limit lacks any scientific or regulatory basis and would simply deprive legitimate businesses of the ability to operate and pay taxes.'

Draft Law No. 14110-d is currently awaiting consideration by the Verkhovna Rada, Ukraine's parliament. Its passage could significantly impact state revenues. Given that the tobacco market is a major source of budget income, the debate over nicotine limits is highly consequential. Lawmakers must carefully weigh all potential economic risks and outcomes when reviewing this initiative.

The adoption of this draft law could have severe repercussions not only for the state budget but also for the Ukrainian tobacco industry's operations. A 2 billion hryvnia drop in excise revenue could affect funding for social programs and other vital government initiatives. Meanwhile, business and expert opinions highlight the need for a balanced regulatory approach that considers both public health objectives and the economic realities facing the country.