Excise wholesale. Checking a retail license with a counterparty 11/03/2020

The circulation of alcohol and tobacco products as excisable goods in Ukraine is quite strictly regulated by the current legislation, and to control its compliance with the structure of the State Fiscal Service, an appropriate unit was created.

In general, the main principles of state policy on the regulation of production, export, import, wholesale and retail trade in ethyl alcohol, cognac and fruit alcohol, rectified ethyl alcohol, grape alcohol, raw grape alcohol, crude alcohol and crude alcohol are regulated by the Law of Ukraine “On State Regulation of Ethanol, Cognac and Fruit, Alcoholic Beverages and Tobacco Alcohol Production and Trafficking” No N 481/95-BP (hereinafter – Law No 481).

The current legislation defines alcoholic beverages and tobacco.

Alcoholic beverages are products obtained by the fermentation of sugar-containing materials or made on the basis of food alcohols with an ethyl alcohol content exceeding 0,5 per cent by volume, specified in headings 2203, 2204, 2205, 2206 (except for live fermentation kvass), 2208 according to UED FEA, as well as with ethyl alcohol content of 8.5 per cent by volume and more, which are indicated in the heading 2103 90 30 00, 2106 90 according to UEFA FEA (Article 1 of Law No. 481) (hereinafter – alcoholic beverages ).

Tobacco products – filter or non-filter cigarettes, cigarettes, cigars, cigars, cigarettes, pipe, snuff, suction, chewing tobacco, shag and other tobacco or tobacco substitutes for smoking, sniffing, sucking or chewing (Article 1 of Law 481) (hereinafter referred to as tobacco).

According to Part 1 of Art. 15 of Law No. 481 the import, export and wholesale trade of alcoholic beverages and tobacco may be carried out by entities of all forms of ownership subject to licenses.

According to paragraph 2 of the Provisional Procedure for the Issuance of Licenses for the Import, Export of Ethyl, Cognac and Fruit Alcohol, Alcoholic Beverages and Tobacco Products and Retail Trade in Alcoholic Beverages and Tobacco, Licenses are issued by the Ministry of Economic Development or their authorized bodies for 5 years.

In turn, trade-in alcoholic beverages and tobacco in the territory of Ukraine can be carried out both wholesale and retail.

Wholesale trade is the activity of purchasing and the corresponding transformation of alcoholic beverages and tobacco for their subsequent sale to the entities of retail trade, other entities (Article 1 of Law No. 481).

Retailing is the activity of selling alcoholic beverages and tobacco directly to citizens and other end-users for their personal non-commercial use, regardless of the form of payments, including bottling in restaurants, cafes, bars, and other catering entities (Art. 1 of Law No. 481).

Summarizing the above, it should be concluded that an entity that has a wholesale license and trade in alcoholic beverages and tobacco has the right to sell these products exclusively to business entities – legal entities and natural persons-entrepreneurs.

However, current law does not specify the obligation for an entity that has obtained a wholesale license to trade in alcoholic beverages and tobacco to verify that a license for the retail sale of alcoholic beverages and tobacco is available to the purchasers of the entities in the sale of the said goods.

Thus, it can be concluded that in this case, the business entity supplying alcoholic beverages and tobacco does not need to check for licenses for the retail sale of alcoholic beverages and tobacco to its counterparty.

In order to ascertain the validity of the above conclusion, the Felix Law Firm has been requested to provide clarification on this issue.

In its letter, the State Fiscal Service of Ukraine fully confirmed these findings, stating that wholesalers licensed to sell alcoholic beverages and tobacco should not require licenses to buy wholesalers or retail trade in alcohol or tobacco.

Thus, the State Tax Service of Ukraine by its letter eliminates the ambiguity of the application of the current legislation in the part of wholesale trade in alcoholic and tobacco products.


Senior Associate
Felix Law Firm
Andrey Mezheritsky