Estonia cuts alcohol excise duty by 25%

A law to amend the Alcohol, Tobacco, Fuel and Electricity Excise Duty Act that stepped into effect in Estonia on Monday cuts the rates of the excise duty on beer, cider and strong alcohol by 25%, informed LETA/BNS.

It appears from the accompanying notes of the bill that the purpose of lowering the duties is giving business operators an opportunity to cut alcohol prices in order to curb cross-border trade with Latvia which gained momentum in 2015. When alcohol becomes cheaper, the amounts of alcohol bought in Latvia may decrease and the amounts bought in Estonia may increase.

In addition, the move is expected to increase the amounts of alcohol purchased on Estonia’s northern border, the government coalition found.

The bill initiated by the parliamentary groups of the ruling coalition members Center Party, Estonian Conservative People’s Party (EKRE) and Isamaa was adopted by the Riigikogu with 70 votes for and nine against on June 13.

During the bill’s second reading, the Riigikogu finance committee included an amendment aiming to prevent the transport of excise goods from Estonia to another member state and back to Estonia only for the purpose of reclaiming the excise duty. Goods already released for consumption in Estonia are therefore subject to the excise duty rate that was in force when the goods were released for consumption for the first time.

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