President Mohamed Muizzu has today ratified a bill passed by Parliament to reverse the government's decision to increase cigarette duties, less than two years after the hike was implemented.
The ratified amendment to the Import-Export Act effectively reduces the current price of cigarettes by approximately 50 percent. The bill, which was proposed to Parliament by the government, will see cigarette prices return to levels similar to those seen before the previous tax hike.
The decision to raise cigarette prices was one of the most significant moves made by the current administration. In November 2024, the Parliament—where the ruling PNC holds a supermajority—approved an increase that saw the duty on each individual cigarette rise to MVR 8, while the overall duty on tobacco shipments was hiked to 50 percent.
However, the amendment ratified today slashes the duty on tobacco products from 50 percent to 30 percent and reduces the specific duty per cigarette from MVR 8 to MVR 4.
This change represents a 50 percent reduction in the specific duty and a 40 percent reduction in the ad valorem duty. Consequently, the total duty levied on cigarettes will be cut by approximately half.
Furthermore, the amendment includes provisions to lower the duty on heated tobacco products. The reduction for these items aligns with the new rates for cigarettes, maintaining the existing policy of taxing heated tobacco products at the same rate as conventional cigarettes.
Following the ratification of the bill today, relevant regulations must be amended to reflect these changes within 30 days.
