The two chambers of the Russian parliament have approved amendments to the  tax code regarding excise tax rates for tobacco products.

As from 1 January 2007, filtertipped cigarettes will be liable to a tax of RUR 100 per 1,000 pieces plus an ad valorem rate of 5 per cent of the minimum retail price, but not less than RUR 115 per 1,000 sticks. The corresponding rates for ovals and papirossy are set at RUR 45 plus 5 per cent, but not less than RUR 60 per 1,000 pieces. It is for the first time that the taxation is related to the retail price of cigarettes, and not the factory price, as before. The specific components of the excise taxes are also raised. As for the new bottom limits set for excise taxes, they’re very likely to lead to a hike in cigarette prices in lower segments, as tobacco products retailed at less than RUR 6 per pack will be liable to a higher ad valorem tax than 5 per cent of the price. (vt)