Ukraine and Moldova Row Over Brandy and Cognac Taxes

It seems that all is not well with trading between the Ukraine and Moldova.

A month or so ago, the World Trade Organization (WTO) presided over the Ukraine’s complaint that Moldova had applied an environmental charge to the beverage sector.  This month Moldova has filed a dispute over what it calls the Ukrainian excess taxes for foreign spirits.

It appears that the Ukraine tax codes make a distinction between cognac and brandy, with brandy being taxed at twice the rate of cognac.  Now, as we know, cognac only comes from Cognac – in France.  However, Moldova is disputing that ‘brandy’ produced either in Cognac or the Ukraine qualifies for lower taxes, and is an unfair distinction over other foreign products.

The Ukraine is an important export market for Moldovan spirits, increasingly so since their exports to Russia and Belarus no longer are a viable option since 2009.

We’re glad to report that the EU is also concerned about the use of the word ‘cognac’ in the Ukraine – both in terms of legislation and the differing tax codes.

Sources: www.ictsd.org

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