Oljas Bibanov, communications manager of JTI Kazakhstan, said that Uzbekistan has two rates for tobacco products.

He said that the rate of excise tax for 1,000 cigarettes with filters, produced in Uzbekistan makes up 10,739 soums (US$6) and for imported ones – US$13.

According to JTI, the volume of cigarettes market of Uzbekistan makes up 17 billion cigarettes ad share of local producer (UzBAT A.O.) is 90%.

Bibanov said that 90% of tobacco products are imposed with excise tax at the rate of US$6 and only 10% on the rate of US$13.

He said that the Government of Uzbekistan could increase receipts from excise tax if it gradually levels rates of excise tax for locally made and imported tobacco products. This would also strengthen competition in the tobacco market.

At the same time, he said that the government should carefully consider this issue and do not set high rates of excise duties, which can lead to growth of cigarettes smuggling into the country. He said that Uzbekistan should analyze rates of excise duties in neighboring states at setting rates.

Oljas Bibanov said that the excise tax rate for 1,000 cigarettes makes up at least US$3.2 in Kyrgyzstan, US$8.4 in Kazakhstan, US$1.1 in Tajikistan and US$25 in Turkmenistan.

According to JTI, high excise tax rates in Uzbekistan create conditions for smuggling. Currently, Kyrgyzstan, Kazakhstan and Tajikistan are main source of cigarettes smuggling into Uzbekistan. At the same time, cigarettes from Uzbekistan smuggled to Turkmenistan.

JTI is international tobacco division of Japan Tobacco (JT). JT is leading global tobacco producer. Net sales of the company made up US$23.5 billion as of the end of financial year, which ends on 31 March 2011. Share of JTI in Uzbekistan makes up 1.5%.