Tobacco Tax Avoidance and Evasion in Serbia

This Policy Brief was written by the Institute of Economic Sciences (IES) in Serbia. The policy brief describes the illicit tobacco market in Serbia using a representative survey of smokers. Both tax evasion and tax avoidance are low overall, at 2.6% and 1.1%, respectively. The researchers find that the illicit market of hand-rolled tobacco (90.7%) is much larger than that of manufactured cigarettes (2.4%). Illicit products can be purchased both at legal and illegal selling points Tax evasion is more common in border municipalities, suggesting that the proximity to the border is an important factor to consider. The policy brief makes policy recommendations to decrease the size of the illicit market, especially the hand-rolled tobacco market, while continuing to increase the tax on tobacco products.