The Kyrgyz Cabinet of Ministers has approved a rise in excise tax rates on alcoholic beverages and sugar-containing drinks, including children’s juices, as part of a broader phased tax reform strategy
According to the State Tax Service (STS), the adjustments are part of a long-term initiative that will continue incrementally through the end of the decade.
The excise tax on vodka and spirits has increased from approximately $1.8 to $2.2 per liter, with an additional annual increase of about $0.2 expected in the coming years. Rates for other alcoholic beverages have also been revised:
- Wine: increased by approximately $0.05 per liter (now around $0.2)
- Cognac: increased by about $0.4 per liter (now about $1.6)
- Beer: increased by roughly $0.03 per liter (now approximately $0.2)
The tax agency highlighted that the changes are being implemented gradually to mitigate potential inflationary effects on retail prices. Officials stated that the reform has a social dimension, aiming to curb consumption of products deemed harmful to public health.
In the first 11 months of last year, Kyrgyzstan collected approximately $228.5 million in excise tax revenues. Of that total, around $55 million came from domestically produced goods, including $38.8 million from alcohol sales.
New Tax Introduced on Sugar-Containing Beverages
The reform also introduces an excise tax on sugar-containing beverages for the first time, including products previously classified as baby food. Previously, such items were exempt, leading to regulatory loopholes.
The STS explained that some manufacturers registered sweetened beverages as baby food to avoid excise duties, creating unfair competition in the market. To close this gap, all sugar-containing beverages, including children’s juices, will now be taxed at a minimum rate of about $0.03 per liter.
Given the typically small packaging sizes, authorities estimate the retail price increase per unit will be modest, approximately $0.01.
The reform reflects a growing regional trend of leveraging fiscal policy to discourage unhealthy consumption habits while generating revenue for public spending.
