Scotch Whisky Braces for Russian Tax Tariffs Increase
The Ukraine special operation by Russia is about to extend its warfare to the Scotch whisky industry among other countries. Whisky exports from the UK and other ‘unfriendly countries’ will now face new taxes of up to 20%. Spirit producers are bracing for the impact.
despite facing heavy sanctions from the US, EU, and the UK, whisky exports to Russia have continued to be a multi-million dollar business. According to The Times, in 2023 Scotch whisky exports to Russia topped £100 million. The industry hardly felt any accommodations from the sanctions.
However, these countries do not export whisky directly to Russia. Most of these exports result from smaller member EU states, such as Latvia and Lithuania. Nonetheless, these tax hikes will strangely affect the distribution sector of these countries.
Scotch Whisky Braces for Russian Tax Tariffs Increase
According to the Scotch Whisky Association, whisky exports to Russia have dwindled to less than 54% in compliance with UK sanction requirements. A report in the Scottish Financial News stated:
“The Scotch Whisky Association, however, downplayed the potential impact, stating that direct exports to Russia have decreased by 54% since the conflict began, and the industry fully complies with UK sanctions. A spokesperson for the industry body said “the impact of any Russian action through tariffs is limited”.
However, less than two years ago, the same group applied for exemption from the sanctions, a request which was granted by an agreement led by First Prime Minister Alex Salmond. The agreement allowed the industry to avoid sanction restrictions.
That being said, while most exporters depend on the Baltic states to do their dirty business, the industry continue to reap millions from the Russian economy. Losing hundreds of millions will definitely have an impact on these producers.
The Russian tariffs are expected to more than double and will affect wines and other alcoholic beverages.