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Tax Gap of Heated Tobacco Products in Estonia
Since January 1st, 2018, the Alcohol, Tobacco, Fuel and Electricity Excise Duty Act paragraph 16(4) includes heated tobacco products in the category of “other smoking tobacco.” Other smoking tobacco is subject to a specific excise tax based on weight of tobacco and rates are updated by the Tax and Customs board on January 1st each year. In 2023, the rate was increased to EUR 107 per kg tobacco. Under recent amendments to the Act (June 2023), the rates are scheduled to increase to:
- Fiscal Year 2024: EUR 112.4 per kg
- Fiscal Year 2025: EUR 118 per kg
- Fiscal Year 2026: EUR 124 per kg
Cigarettes are taxed according to a mixed excise system with a minimum specific excise. The ad valorem excise is 30% of the retail sales price (RSP). Since 2023, the specific excise has been EUR 96.3 per 1000 cigarettes and the minimum excise was EUR 166.35 per 1000 cigarettes. Under recent amendments to the Act (June 2023), the rates are scheduled to increase to:
- Fiscal Year 2024: Excise of EUR 169.1 per 1000 cigarettes and minimum excise of EUR 222 per 1000 cigarettes
- Fiscal Year 2025: Excise of EUR 177.1 per 1000 cigarettes and minimum excise of EUR 233 per 1000 cigarettes
- Fiscal Year 2026: Excise of EUR 186.7 per 1000 cigarettes and minimum excise of EUR 244 per 1000 cigarettes
Sources:
- Alcohol, Tobacco, Fuel and Electricity Excise Duty Act, as amended on March 31, 2017, to include heated tobacco
- Republic of Estonia Tax and Customs Board: Rates of Excise Duty
- Act on Amendments to the Alcohol, Tobacco, Fuel and Electricity Excise Act and the Alcohol, Tobacco, Fuel and Electricity Excise Act and Other Acts Amendment Act 145 SE (June 2023)
Last updated Sept. 1, 2023