Moldova is taking significant steps towards aligning its tax policies with those of the European Union (EU), particularly in the realm of tobacco and nicotine products. A new tax proposal, which has recently passed its first reading in the Moldovan Parliament, aims to increase excise taxes on e-cigarette cartridges and liquid tanks.
Overview of Moldova’s New Tax Proposal
On July 16, the Moldovan Parliament passed the 2025 tax policy draft on its first reading. The key points of the proposal include:
- Increase in Excise Tax on E-cigarette Cartridges and Liquid Tanks: The tax will rise from 2,690.87 MDL per liter (USD 152.40) to 3,094.50 MDL per liter (USD 175.13).
- Increase in Excise Tax on Cartridges for Heated Tobacco Devices: The tax will increase from 1,318.62 MDL per 1,000 units (USD 74.65) to 1,384.55 MDL per 1,000 units (USD 78.38).
Government’s Rationale and Objectives
Alignment with EU Tax Practices
The Ministry of Finance stated that this proposal is part of an effort to align Moldova’s tax practices with those of EU countries. This alignment is expected to create a more consistent regulatory environment and reduce the consumption of tobacco products through adjusted tax policies.
Health and Consumption Goals
Finance Minister Petru Rotaru emphasized the government’s commitment to reducing tobacco consumption. Besides raising excise taxes, the government will collaborate with the Ministry of Health to implement additional measures based on advanced European practices to discourage tobacco use.
Current Taxation Context in Moldova
Currently, the excise tax on nicotine liquids for e-cigarettes in Moldova is lower than the average level in EU countries. In contrast, the tax rate on cartridges for heated tobacco devices is higher than in the EU, creating an inconsistency that the new proposal aims to address.
Comparison with Ukraine’s Tax Policies
Recent Legislative Actions in Ukraine
In early June, Ukraine’s Verkhovna Rada also passed a first reading of a calendar for excise tax modifications on tobacco products. This proposal includes different excise taxes for various tobacco products, with a gradual increase planned to align with EU practices.
Current Excise Tax Rates
- Ukraine: The excise tax on e-cigarette e-liquids is EUR 224 per liter.
- Moldova: The excise tax on e-cigarette e-liquids is currently EUR 122 per liter.
Ukraine’s approach provides a reference point for Moldova, showcasing a regional trend towards higher taxation on tobacco and nicotine products to curb consumption.
Implications of the Proposed Tax Changes
The proposed tax increases are expected to have several implications:
- Economic Impact: Higher taxes could lead to increased government revenue. However, they might also affect the affordability and sales volume of e-cigarettes and related products.
- Public Health Impact: By increasing the cost of e-cigarettes and heated tobacco products, the government aims to reduce their consumption, thereby improving public health outcomes.
Next Steps and Potential Challenges
Legislative Process
The proposal has passed its first reading and will need to undergo further readings and approvals before it becomes law. This process will involve additional discussions and potential amendments.
Challenges in Implementation
- Compliance and Enforcement: Ensuring compliance with the new tax rates and preventing smuggling or illicit sales could be challenging.
- Market Response: The market might respond with price adjustments, potentially affecting consumer behavior and the overall success of the tax increase in reducing consumption.
FAQs
What is the new excise tax rate on e-cigarette cartridges in Moldova?
The new excise tax rate on e-cigarette cartridges and e-liquid tanks will increase from 2,690.87 MDL per liter (USD 152.40) to 3,094.50 MDL per liter (USD 175.13).
Why is Moldova increasing the excise tax on e-cigarettes?
The increase aims to align Moldova’s tax practices with EU countries and reduce the consumption of tobacco products through adjusted tax policies.
How does Moldova’s current excise tax on e-liquids compare to the EU?
Moldova’s current excise tax on nicotine liquids for e-cigarettes is lower than the average level in EU countries.
What measures will Moldova take besides raising excise taxes to reduce tobacco consumption?
Besides raising excise taxes, the government will collaborate with the Ministry of Health to implement measures based on advanced European practices to discourage tobacco use.
What are the excise tax rates on heated tobacco devices in Moldova?
The excise tax on cartridges for heated tobacco devices will increase from 1,318.62 MDL per 1,000 units (USD 74.65) to 1,384.55 MDL per 1,000 units (USD 78.38).
