Fic rEcommEndationS - Eurobank EFG

TOBACCO INDUSTRY
WHitE BooK BaLancE ScorE card
cUrrEnt SitUation
The tobacco industry is one of the strongest and most stable
sectors in the Serbian economy, contributing to over 12 percent
of total Government revenues and nearly 2 percent of
Serbia’s GDP. Three leading global tobacco companies have
established their production capacities locally, while the level
of foreign investments in the tobacco industry exceeded
1.2 billion EUR, which clearly demonstrates investors’ mid
and long-term commitment to Serbia. Taking into account
Serbia’s EU aspirations and the economic significance of the
tobacco industry, the importance of having a predictable fiscal
and regulatory environment gradually heading towards
alignment with the relevant EU directives, is crucial to ensure
sustainability and further industry development.
In that respect, the additional excise tax increase in December
2010 that altered the excise tax calendar articulated through
the Excise Tax Law, which was supposed to be in place by end
of 2012, was made without consulting with the industry, thus
causing uncertainty and unpredictability for the industry.
PoSitiVE dEVELoPmEntS
In the past year, the most important positive development
for all stakeholders including the hospitality sector and the
Government was the adoption of the new Law on Protec-
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Recommendations:
The Regulator has to set forth clear rules in tobacco advertising which would be effectively
enforced and which would create a level playing field for all market participants.
The Government should extend the tax planning beyond 2012 in order to ensure
gradual, smooth and timely harmonisation with EU requirements, particularly
taking into account recently revised EU tax related Directives 92/79 and 92/80.
Ear-marked tax on tobacco products as health-related Budget fund charge undermines
the operating environment for investors and makes public finance less transparent
and contrary to IMF recommendations and positive EU practices. All fiscal
charges on tobacco products should be directed specifically through Law on Excise.
The Government should take a negative position on the adoption and implementation
of the Guidelines for the implementation of FCTC's Articles 9 and 10,
thus preventing significant distortions in the tobacco market, tobacco production
and processing, and the production and export of cigarettes.
Introduced
in the WB:
tion of Population from Exposure to Tobacco Smoke regulating
smoking in public places. FIC welcomes the adoption
of a balanced solution that is already effectively enforced.
rEmaininG iSSUES
Significant
progress
Certain
progress
2008 √
2009 √
No
progress
2010 √
2010 √
As a result of the current Excise Tax Law, Serbia has some of
the cheapest cigarettes in Europe and is a potential source
of outflow of cigarettes towards EU member states. This is
a potential reputation risk, particularly relevant to the prospects
of Serbia’s candidacy for EU membership. FIC strongly
supports the adoption of a new long-term excise calendar
in order to ensure gradual, smooth and timely harmonisation
with EU requirements and on the other hand predictability
of regulatory environment. FIC believes that the dialogue
between the Government and the industry from the
early stages of tobacco excise tax planning and regulatory
policy development is very important for the predictability
of the regulatory environment.
The current health-related Budget fund charge in the Tobacco
Law makes public finances less transparent and contrary
to EU member states positive practice and IMF recommendations.
The Government should consistently pursue
transparency of tobacco taxation ensuring that all fiscal
charges on tobacco products are directed solely through
the Law on Excise.
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