Amendments to the tax code were approved in Russian parliament, Duma, in the first reading on 7 June 2006.

The document changes the excise tax regime for tobacco products and sets the tax rates for filters at RUR 95 per 1,000 sticks plus 5 per cent of the maximum retail price quoted on the packs. Tax rates for ovals are set at RUR 45 per 1,000 pieces plus 5 per cent of the retail price. In both cases, a minimum rate is also determined, RUR 115 per 1,000 filters and RUR 65 per 1,000 non-filters. (RUR 1 = EUR 0.3.) It is for the first time that excise tax derived from retail price of cigarettes is to be introduced in Russia. The existing system is based on percentage of the release price plus a set amount per 1,000 cigarettes and, according to the government tax agencies, has been instigating tobacco makers to understate the selling price of their products, so that to minimise corresponding tax payments. The bill still has to pass two more parliamentary readings and get approved by the senators and president. (vt)