Excise duty on alcoholic, tobacco products rises


The percentage of excise duty, also called personal consumption tax, levied on alcoholic drinks and tobacco products were raised, except for fresh grape wine, sparkling wine and other fermented beverages.

The decision of the Council of Ministers, which came into effect following its publication on the Official Gazette of the Republic of Turkey, increased the excise duty on alcoholic beverages and tobacco products by 10 percent and 27.5 percent, respectively. The latest increase is expected to raise the price of alcoholic drinks by 3 to 4 percent.

While the percentage of fixed tax on cigarettes has not changed, the amount of fixed tax per package increased. The 7 kuruş increase in the fixed tax levied on tobacco will yield a 5 to 6 percent increase in the prices, which brings a 50 kuruş, 27.5 percent rise, in cigarette prices. Moreover, fixed tax per package, which was TL 5.1 before the amendment, increased to TL 6.5.

At the beginning of 2016, the excise duty on alcoholic drinks and cigarettes were increased, which yielded an increase in prices up to 10 percent. The recent decision therefore raised excise duty percentage on alcoholic drinks and tobacco products one more time before the year ends.

Halk Investment (Halk Yatırım) has prepared an analysis report on how the recent tax regulation will also affect stock shares traded at the BIST (The Borsa Istanbul). The report forecasts a "limited negative" impact on the shares of Anadolu Efes (AEFES) and Tuborg (TBORG) traded at the BIST.

The report also states that the excise tax regulation will create a 0.3 to 0.4 percent rise in the December inflation rate.

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