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Tax Gap of Heated Tobacco Products in Poland
Heated tobacco products were introduced in the Poland in 2017 with the launch of IQOS by Philip Morris International. In 2017, the Act on Excise Duty was amended to create a new tax category for heated tobacco products. The associated excise tax was initially set to come into effect on January 1st, 2018, but its implementation was delayed to January 1st, 2019, after lobbying from the tobacco industry. It was later postponed again to July 1st, 2020. Heated tobacco is defined as “a mixture which contains tobacco or raw tobacco.” Poland applies mixed excise duty on heated tobacco with the weight of the tobacco mixture (kgs) as the taxable base. Effective July 1st, 2020, the new excise tax on novel tobacco products has consisted of two elements: a specific excise tax based on kilograms and an ad valorem excise based on the weighted average retail price (WARP) established by the Ministry of Finance. And published in annual announcements in the official publication “Monitor Polski”. In 2023 the excise duty amounts to PLN 342.74 per kg of tobacco plus 32.05% of the WARP of smoking tobacco. The rate per kg is set to increase annually to PLN 377.01, PLN 414.71 and PLN 456.18, finally stabilizing in 2027 at PLN 501.80. The ad valorem excise will remain constant.
The WARP used by for novel products is the same as that on smoking tobacco and is currently PLN 518.38 per kg of tobacco.
Poland also applies a mixed excise tax system on cigarettes. Since January 1st, 2023, the specific excise tax is PLN 250 per 1000 cigarettes and the ad valorem rate is 32.05% of the retail sale price. The rates are set to increase each year to PLN 276 per 1000 cigarettes in 2024, PLN 303.6 in 2025, and PLN 334 per 1000 cigarettes in 2026. There is also a minimum excise duty (computed based on the WARP) of PLN 518.78 per 1000 cigarettes in 2023.
Sources:
- Amendment to the Excise Tax Act
- Ministry of Finance: Tax portal (including all excise taxes)
- Monitor Polski: “Announcements on the weighted average retail selling price of cigarettes and the weighted average retail selling price of smoking tobacco”, up to 2021.
Last updated Sept. 1, 2023