The Verkhovna Rada adopted a law on the implementation of an electronic excise tax stamp

On June 29, 2023, the Verkhovna Rada adopted Law of Ukraine №3173-IX dated 29.06.2023 “On amendments to the Tax Code of Ukraine and Other Laws of Ukraine in connection with the Implementation of Electronic Traceability of Alcoholic Beverages, Tobacco Products and Liquids Used in Electronic Cigarettes" (further — the "Law"). The Law introduces electronic traceability of the circulation of alcoholic beverages, tobacco products and liquids used in electronic cigarettes, including through the introduction of an electronic excise tax stamp, an electronic circulation system, and an excise electronic document.

Certain provisions of the Law became effective on 26.07.2023. The main provisions of the Law, namely, the electronic circulation tracking system, will be implemented in 2026.

Below we comment on the main changes introduced by the Law. We would be happy to discuss the relevant changes in more detail in the context of your business.

Digitalization of control over the circulation of alcoholic beverages and tobacco products

• Starting from January 1, 2026, an electronic excise tax stamp (instead of a paper stamp) is introduced for alcoholic beverages, tobacco products and liquids used in electronic cigarettes.
• The Law establishes the procedure of the formation and circulation of unique identifiers of electronic excise tax stamps and electronic excise tax stamps. In addition, certain changes have been introduced to the liability for non-compliance with these requirements.
• In order to obtain the electronic stamp, taxpayers will be required to register as an “economic operator” in the Electronic System for the Circulation of alcoholic beverages, tobacco products and liquids used in electronic cigarettes (further — “Electronic System”) and place an order for the formation of the electronic excise tax stamp. The amount of excise tax has to be paid within 15 business days after the economic operator receives the generated unique identifiers to excise tax stamps.
• In order to adjust tax liabilities in case of return of excisable goods by the buyer/recipient, the respective electronic excise tax stamps will have to be deactivated. This should simplify the return process, as it will not require physical actions as with the paper stamps previously.
• The Electronic System, electronic traceability and an electronic excise document are introduced. Economic operators will be obliged to record each stage of movement of labeled goods using the software tools of the Electronic System and to draw up Excise Electronic Documents.
• The Law also expands the definition of tobacco products and details the procedure for the functioning of the Unified State Register of Equipment for the Preparation or Processing of Tobacco, Tobacco Raw Materials, and Industrial Production of Tobacco Products.

Some other changes to the excise tax

• The moment of settlement of the monetary liability for the amount of excise tax liabilities has been determined.
• Restrictions (previously absent) are set for the application of the excise tax exemption for tobacco products, liquids used in electronic cigarettes and alcoholic beverages, which are used for research, certification or testing purposes.
• The tax promissory note regulates the issue of excise taxation on the bottling of imported alcoholic beverages in consumer packaging. Previously, import of alcoholic beverages was subject to excise tax twice upon further bottling into consumer packaging.