Cigarette prices in Bulgaria to increase by 30%

Top-selling mid-price brands of cigarettes in Bulgaria are expected to add BGN 1-1.20 per box due to the new minimum excise duty rates introduced by the EU.

By end-2017, the excise tax rate is to reach EUR 90 per 1000 cigarettes, according to reports of Bulgarian daily 24 Hours.

Top-selling cigarette brands in Bulgaria now have a price tag of BGN 4.50, which is expected to increase by around 30% in the next four years to no less than BGN 5.50-5.70.

Cigarette prices in Bulgaria have remained unchanged since 2010, when the latest increase in the excise tax rate took effect, staying unaffected by the 11.5% inflation rate for the past three years.

Unlike Bulgaria, cigarette prices in other EU Member States went up by 2-14% in 2013 only, the average increase amounting to 4%.

Bulgaria now has the lowest cigarette prices in the EU.

A survey has shown, however, that Bulgaria has one of the highest tax burden rates.

In the case of a mid-priced box of cigarettes worth BGN 4.50, less than BGN 1 goes to production costs, while the remainder is used to pay taxes and buy excise tax stamps, according to Bulgarian daily 24 Hours.

Bulgaria has one of the highest tariffs for excise tax stamps, EUR 6.1 per 1000 cigarettes.

In a number of other EU Member States, excise tax stamps are free-of-charge because their cost is covered by the state or is included in the excise duty rate.

As a result, many companies are selling their tobacco products in the low-end price segment in Bulgaria, registering zero profit or even losses.

According to analysts, all Bulgarian cigarette companies face a predicament, while many international companies are registering negative financial results.

A slight increase by BGN 0.10-0.20 per box of cigarettes may be expected in 2013 in Bulgaria, provided that the excise tax rate does not go up.

Adapted from Novinite