Armenia Excise Tax Hike to Raise Tobacco and Alcohol Prices by 13%
The Armenian National Assembly approved amendments to the Tax Code on July 3, setting higher excise tax rates for tobacco, alcohol, and electronic cigarettes from 2027 to 2029. Economist Grant Mikaelyan stated on July 17 that the reform serves a dual fiscal and social purpose, with retail prices expected to rise by up to 13% starting February 1, 2027.
Mikaelyan noted that the policy aims to reduce the consumption of harmful substances to protect public health and long-term economic productivity. While the price increase is notable, the economist expects a gradual decline in smoking and drinking rates rather than a sudden drop.
The tax adjustments vary by product category:
- Cigarettes: Excise taxes will rise by 10%, followed by an additional 15% increase.
- Vapes and Wine: Excise taxes will increase by approximately 25%.
- Retail Impact: These adjustments will increase final shelf prices by 12% to 13%.
Addressing concerns about tax evasion, Mikaelyan contrasted this reform with the 2025 turnover tax hike, which caused a 29 billion dram tax shortfall as businesses moved underground. For tobacco and alcohol, he believes the risk of shadow-market growth is minimal due to strict oversight in Armenian retail stores, where selling untaxed goods is nearly impossible.
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