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TAXATION OF TOBACCO PRODUCTS GENERAL DIRECTORATE OF REVENUE POLICIES (28/08/2012)

TAXATION OF TOBACCO PRODUCTS GENERAL DIRECTORATE OF REVENUE POLICIES (28/08/2012). 1. TASKS OF TURKISH MINISTRY OF FINANCE IN TERMS OF REVENUES. 2. CURRENT STRUCTURE OF TOBACCO TAXATION. There are two types of tax on tobacco products: value-added tax (VAT) and excise taxes.

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TAXATION OF TOBACCO PRODUCTS GENERAL DIRECTORATE OF REVENUE POLICIES (28/08/2012)

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  1. TAXATION OF TOBACCO PRODUCTS GENERAL DIRECTORATE OF REVENUE POLICIES (28/08/2012) 1

  2. TASKS OF TURKISH MINISTRY OF FINANCE IN TERMS OF REVENUES 2

  3. CURRENT STRUCTURE OF TOBACCO TAXATION • There are two types of tax on tobacco products: value-added tax (VAT) and excise taxes. • All tobacco products are subject to VAT. • Leaf tobacco is not subject to excise duty. • Products obtained from leaf tobacco is subject to excise duty. 3

  4. CURRENT STRUCTURE OF TOBACCO TAXATION • Excisetax is levied on thefollowingtobaccoproducts: • cigars, cherootsandcigarilloscontainingtobacco • cigarettescontainingtobacco • othercigars, cheroots, cigarillosandcigarettesmade of ingredientsdeemed as tobacco • smokingtobaccowhetheror not containingtobaccosubstitutes in anyproportion • others, in net content of lessthan 500 g packages (CN code: 2403.10.10.00.19); • others, in net content of morethan 500 g packages (CN code: 2403.10.90.00.19); • chewingtobaccoandsnuff 4

  5. EXCISE SYSTEM • The ad-valorem tax with the specific tax floor. • Currently, the ad-valorem tax is65 % and the specific tax floor per package is 2,90 TL. • Companies pay the greater of the ad valorem or the specific excise which is calculated on the retail price of the product. 5

  6. TAX BURDEN ON CIGARETTES (PER PACK) Excise tax burden is 65 %, VAT burden is 15,25 %, Total burden of indirect taxes is 80,25 %. 6

  7. SHARES OF THE TOBACCO EXCISE TAX IN TOTAL TAX REVENUE (2011) • 4,1 % of the total revenue, • 5,3 % of the total taxrevenue, • 12,8 % of the total indirecttaxrevenue, • And 23,6 % of the total excisetax is from • tobaccoexcisetax. • Total revenuefromtobaccoexcisetax is 15,9 million TL • ( 8,8 million $). 7

  8. MOST RECENT CHANGES IN TAX POLICY • Harmonization With The EU Acquis • In view of harmonize its legislation in the area of tobacco taxation with the EU Acquis, Turkey has amended the Excise Tax Law as of 15th of June 2012. • With this amendment tobacco excise tax system has been changed: namely, ad valorem with a specific floor system has been replaced by mixed specific and ad valorem excise with a specific tax floor. • Council of Ministers is authorized to set the specific excise amounts but it has not set the specific excise amounts yet. • Periodic Increases • Specific tax will be increased automatically in every six months so as to keep up with the inflation and maintain their real value. 8

  9. CIGARETTE PRICES 9

  10. THANK YOU 10

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