Following the announcement by the Turkish Statistical Institute (TÜİK) that the change rate of the Producer Price Index (YİÜFE) for the July-December period is 7.55%, the Special Consumption Tax (ÖTV) on alcohol and cigarettes will increase by this rate unless a Presidential decree is issued. The excise tax on fuel was raised by 6% on December 31, but it was decided that automatic increases will not apply in the first half of 2025.
According to calculations made by ekonomim.com, the new excise tax rates will result in an increase of at least 2-2.5 lira for cigarette prices and 100 lira for a liter of rakı. These increases are based solely on the ÖTV adjustment. It is expected that alcohol and tobacco companies may impose even higher price hikes, considering other costs such as energy and labor.
A 75 Lira Cigarette Pack Will Increase by at Least 2.5 Lira
If the Ministry of Finance does not set a different amount or rate in the Excise Tax III list, the 7.55% increase in ÖTV will cause the minimum fixed excise tax on cigarettes, which is currently 1.7026 lira, to rise by about 13 kuruş, reaching 1.8312 lira. The minimum fixed excise tax per cigarette pack will increase from 34.05 lira to 36.62 lira. This fixed excise tax is applied regardless of the sales price.
However, about 99% of the cigarettes on the market are priced with an excise tax higher than the minimum fixed rate. The excise tax on cigarettes per pack will increase from 7.80 lira to 8.38 lira, meaning an increase of about 58 kuruş per pack. Tobacco companies are expected to reflect this 2.5 lira increase in retail prices, but with additional changes in energy and labor costs, the price hike may be even higher.
Changes in Tax Rates and Reduced Multiplier Effect
The excise tax rate on cigarettes was reduced from 63% to 57% at the beginning of last year. In the same regulation, a significant increase in the fixed excise tax was also implemented. Before this change, a 1 lira increase in cigarette costs (such as tobacco, energy, labor, etc.) would have caused a 7.5 lira increase in the retail price. With the new system, this multiplier effect has been reduced to 5.2 lira for every 1 lira increase in costs.
Currently, for a 75 lira pack of cigarettes, the tax breakdown is as follows:
- Sales Price: 75 lira
- Proportional Tax (57%): 40.13 lira
- Fixed Tax (per pack): 8.39 lira
- Total Tax (Proportional + Fixed): 48.51 lira
- VAT (20%): 12.50 lira
- Total Tax Burden: 61.01 lira
- Retailer Margin: 5.25 lira
- Manufacturer’s Share: 8.74 lira
1 Liter of Rakı to Exceed 1350 Lira
The Revenue Administration (GİB) also announces the excise tax on alcoholic beverages (fixed minimum excise tax) in the Excise Tax III list.
The excise tax rate for rakı is based on the tax for pure alcohol. The rate for a liter of rakı was previously set at 1,269.72 lira. If the Ministry of Finance does not determine a different rate, this amount will increase by 7.5%, reaching 1,365.69 lira. As a result, the excise tax on 1 liter of 45% alcohol rakı will increase from 571.37 lira to 614.56 lira.
Last year, the price of 1 liter of rakı before taxes was around 417 lira. Adding the 614.56 lira fixed excise tax brings the price before VAT to 1,058.56 lira. With 20% VAT, the retail price of 1 liter of rakı will exceed 1,270.27 lira. However, alcohol producers are expected to set even higher prices, considering other rising costs.
