New Russian Taxes Hit Bulgarian Wine and Flowers

The Russian government has unexpectedly decided to increase the excise duty on imported alcohol, wine, and cut flowers from "unfriendly countries," including Bulgaria. This new measure, which will take effect seven days after its announcement and remain in place until December 31, 2024, is outlined in a decree recently prepared and approved by the Ministry of Finance, according to Moscow's RBC publication.

The decree includes a significant rise in the excise duties: for strong alcoholic beverages, the rate will increase from 9% to 20% of the customs value, with a minimum charge of 3 euros per liter of 100% spirit, up from the current 1.4-1.5 euros. For wine, the duty will rise from 20% to 25% of the customs value, but not less than 2 euros per liter. Additionally, the duty on cut flowers will be raised from 5% to 20%, with a minimum of 0.3 euros per kilogram.

This decision is presented as a protective measure for the Russian market, where imported spirits account for around 12% and wine for nearly 40% of consumption. In August 2023, Russia had already increased the excise duty on "unfriendly" wines from 12.5% to 20%, and this new adjustment adds another 5 percentage points to the rate.

Local producers and traders are capitalizing on this protectionist trend. In March, the Association of Vineyard and Winery Owners in Russia (AVVR) proposed a drastic increase in excise duties for "enemy countries" to 200% of the value and suggested imposing a quota for Russian wines in cafes and restaurants. The AVVR's executive secretary noted that in other wine-producing countries, local production makes up 80-90% of the market, although the source of this data was not specified.

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