The volume of wine imports to Russia may significantly decline already this year, due to the decision of the Russian government to raise the excise tax for wines with protected geographical status and protected designation of origin.
According to the recent decision of the Russian Ministry of Finance, the rate of tax will grow from RUB5.00 (€0.078) to RUB18.00 per one litre of still wines, while in the case of sparkling wines these figures will grow from RUB 13.00 to RUB 36.00.
The Russian government is also considering introducing a retrospective tax charge for wines which were imported to Russia from 1 January,2016, when a lower tax regime was in force.
The decision of the state to increase taxes has already criticized by Russian wine importers, who claim the new measures will result in financial losses and bankruptcies.
Some of the larger companies may face additional excise taxes in excess of RUB 100m ($2m). Importers have also suggested that the tax increase is a result of lobbying by leading domestic wine producers.
According to data from the Russian Federal Customs Service, geographically protected wines account for between 25% to 30% of wine imports to Russia.
The tax increases will mainly affect imported wines from the low- and middle-priced segments of the market, which are typically priced no higher than RUB 100.00 (€15.77). The prices for these wines may significantly increase.
A spokesman for the Russian Association of Wine Producers said that importers are currently considering filing a lawsuit in Russia’s federal court, seeking to block the controversial decision.