On the ratification of the Agreement on the Principles of Tax Policy in the field of excise taxes on Tobacco Products of the Member States of the Eurasian Economic Union

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The Law of the Republic of Kazakhstan dated April 1, 2021 No. 27-VII SAM.

To ratify the Agreement on the Principles of conducting tax Policy in the field of excise taxes on tobacco products of the Member States of the Eurasian Economic Union, signed in St. Petersburg on December 19, 2019.

President

Republic of Kazakhstan

K. TOKAEV

AGREEMENT on the Principles of conducting tax policy in the field of excise taxes on tobacco products of the Member States of the Eurasian Economic Union

(Entered into force on March 4, 2022, Bulletin of International Treaties of the Republic of Kazakhstan 2022, No. 1, art. 5)

The Member States of the Eurasian Economic Union, hereinafter referred to as the Member States,

Guided by the provisions of section XVII of the Treaty on the Eurasian Economic Union of May 29, 2014 and the Protocol on the Procedure for Collecting Indirect Taxes and the Mechanism for Controlling their Payment on the Export and Import of Goods, Works, and Services (Appendix No. 18 to the said Agreement),

Having regard to the World Health Organization Framework Convention on Tobacco Control of May 21, 2003,

in order to create conditions for the functioning of the tobacco products market within the framework of the Eurasian Economic Union (hereinafter referred to as the Union) and to develop a competitive environment in the sphere of tobacco products turnover,

Sharing the desire to deepen economic integration within the Union,

Recognizing the need to ensure the protection of the economic interests of the Member States,

Reaffirming its commitment to the universally recognized principles and norms of international law,

Recognizing the inalienable right of each Member State to independently determine the level of taxation of tobacco products and to pursue a tax policy on these products in its territory,

have agreed on the following:

Article 1 Subject of the Agreement

This Agreement is aimed at providing conditions for the functioning of the tobacco products market within the Union by harmonizing (approximating) excise tax rates on tobacco products sold in the territories of the Member States, and defines the procedure (including basic principles and measures) for harmonizing (approximating) excise tax rates on cigarettes classified in subheading 240220 of the single Commodity Nomenclature of foreign economic activity of the Eurasian Economic Union.

Article 2 Principles of harmonization (convergence) of excise tax rates on tobacco products

Harmonization (convergence) Excise tax rates on tobacco products are based on the following principles:

accounting for differences in the size of gross domestic product per capita of the Member States, disposable incomes of the population of the Member States, accessibility (including price) of tobacco products for the population of the Member States;

acceleration of the growth rates of excise taxes on tobacco products in Member States with lower growth rates and deceleration of the growth rates of excise taxes on tobacco products in Member States with higher growth rates;

consideration of the socio-economic development plans of the Member States (including their regions);

ensuring the right of Member States to independently determine the types of excise tax rates applied on tobacco products (ad valorem, specific, combined);

transparency and predictability of the tax policy of the Member States in the field of setting excise tax rates on tobacco products.

Article 3 Harmonization (approximation) excise tax rates on tobacco products

1. Harmonization (convergence) excise tax rates on tobacco products are carried out by setting:

the unified indicative rate of excise taxes on tobacco products (hereinafter referred to as the indicative rate);

A 5-year period for reaching the indicative rate level;

ranges of deviation of the actual excise tax rates on tobacco products from the indicative rate (hereinafter referred to as ranges of deviation).

The indicative rate and deviation ranges are approved every 5 years starting from 2024 in accordance with the procedure provided for in this article.

2. The actual rates of excise taxes on tobacco products are established by the legislation of the Member States and are the cumulative sum of the specific and (or) ad valorem parts of the excise tax.

3. The indicative rate is applied in the national currency of the Member State at the euro exchange rate effective on the 1st day of the fiscal year.

4. Member States no later than 2 years before the end of the period of application of the indicative rate within the framework of the work of the advisory body under the Board of the Eurasian Economic Commission (hereinafter referred to as the Commission) In matters of tax policy and administration, proposals are being developed on measures to harmonize (approximate) excise tax rates on tobacco products for the next period of application of the indicative rate.

The amount of the indicative rate for tobacco products agreed by the Member States and the ranges of deviation are approved by the Council of the Commission.

5. If there is a reasonable economic feasibility of changing the size of the indicative rate and the ranges of deviation, as well as in the case of a change in the exchange rate of the national currencies of the Member States against the euro by more than 15 percent, the Council of the Commission may, on the initiative of any of the Member States, decide to change the relevant indicators.

Article 4 The amount of the indicative rate and ranges of deviation for cigarettes for 2024

1. In 2024, Member States will apply an indicative rate in national currency equivalent to 35 euros per 1,000 cigarettes.

2. In 2024, the actual excise tax rates in force in the Member States may deviate from the indicative rate specified in paragraph 1 of this Article by no more than 20 percent down or up.

Article 5 Cooperation on issues of tax policy in the field of excise taxes on tobacco products

1. In order to implement measures to harmonize (approximate) excise tax rates on tobacco products, the Commission assists Member States in conducting consultations on tax policy issues in the short, medium and long term regarding excise tax rates on tobacco products, as well as monitors the achievement by Member States of the indicative rate level.

2. The Member States annually, by August 1, submit to the Commission information on the planned rates of excise taxes on tobacco products for the next calendar (budget) year in accordance with the legislation of the Member States, as well as information on the planned rates of excise taxes in the medium and long term (if any).

3. Based on the results of the analysis of the information received in accordance with paragraph 2 of this Article, the Commission shall forward it to the Member States for the implementation of the provisions of Articles 3 and 4 of this Agreement.

If, after receiving the specified information from the Commission, one of the Member States decides to change the excise tax rates on tobacco products, information on the new excise tax rates is sent to the Commission and other Member States no later than 60 calendar days before the date of entry into force of the relevant act of the Member State.

Article 6 Tax sovereignty

Nothing in this Agreement shall be interpreted as:

the requirement for any Member State to set excise tax rates on tobacco products, which may be considered contrary to its security interests.;

an obstacle for any Member State to take actions that it considers necessary to protect its safety by adopting an act providing for the establishment of excise tax rates on tobacco products.

Article 7 Administrative cooperation

In order to prevent the sale of tobacco products in the customs territory of the Union without paying excise taxes and other indirect taxes, the Member States determine the procedure for administrative cooperation between their authorized bodies (including through the conclusion of relevant international agreements within the Union).

Article 8 Relation to other international treaties

The provisions of this Agreement shall not affect the rights and obligations of the Member States arising from other international treaties to which they are parties.

Article 9 Final provisions

1. Disputes related to the interpretation and (or) application of this Agreement shall be resolved in accordance with the procedure established by the Treaty on the Eurasian Economic Union of May 29, 2014.

2. By mutual agreement of the Member States, amendments may be made to this Agreement, which are formalized in separate protocols.

3. This Agreement is an international agreement concluded within the framework of the Union and is included in the law of the Union.

4. This Agreement shall enter into force on the date of receipt by the depositary, through diplomatic channels, of the last written notification on the completion by the Member States of the internal procedures necessary for the entry into force of this Agreement.

Done in St. Petersburg on December 19, 2019, in one original copy in Russian.

The original copy of this Agreement shall be kept at the Eurasian Economic Commission, which, as the depositary of this Agreement, will send each member State a certified copy thereof.

For the Republic

Armenia

For the Republic

Belarus

For the Republic

Kazakhstan

For Kyrgyz

The Republic

For the Russian

The Federation

I hereby certify that this text is a complete and authentic copy of the Agreement on the Principles of Tax Policy in the Field of Excise Taxes on Tobacco Products of the Member States of the Eurasian Economic Union, signed on December 19, 2019 in St. Petersburg.:

for the Republic of Armenia – Deputy Prime Minister of the Republic of Armenia Mikhail Grigoryan;

for the Republic of Belarus – Deputy Prime Minister of the Republic of Belarus I.V. Petrishenko;

for the Republic of Kazakhstan – First Deputy Prime Minister of the Republic of Kazakhstan – Minister of Finance of the Republic of Kazakhstan A. A. Smailov;

for the Kyrgyz Republic – Deputy Prime Minister of the Kyrgyz Republic J. P. Razakov;

for the Russian Federation – First Deputy Chairman of the Government of the Russian Federation – Minister of Finance of the Russian Federation A.G. Siluanov.

The original copy is kept at the Eurasian Economic Commission.

Director

Legal Department

Of the Eurasian Economic Commission

V. I. Taraskin

President

Republic of Kazakhstan

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