Bulgaria has to increase the excise on tobacco products in order to meet European Union requirements, manager of tobacco taxation in Europe at the Belgian representation of British American Tobacco (BAT) Francois Osete said.

BAT held a conference on the tobacco products market development. The meeting focused on the excise duty on cigarettes and illicit trade.

According to current EU requirements for excise on tobacco products, each country should reach the minimum level of 64 euro per 1000 cigarettes and 57 per cent of the retail price.

"Bulgaria has not reached the minimum level of 64 euro," Osete said.

Once it has reached the level, the country can exceed those figures since there is no maximum fixed. The period for reaching the requirement is 2010 for Bulgaria.

"Bulgaria should reach the minimum excise levels bit by bit," Osete said.

European governments should also apply a mixed taxation regime combining ad valorem and specific component of taxation tools.

Ad valorem component is a percentage of the retail price and the specific component is a fixed sum in euro per 1000 cigarettes.

Senior investigations manager at BAT headquarters in London Terry Hobbs also took part in the discussion.

"Counterfeit is not the biggest problem but tax evasion is," Hobbs said. The company's annual losses from illicit trade amount to 60 million pounds, Hobbs said.

The figures for Bulgaria show that between five and 12 per cent of consumption results from illicit trade.

Sensible taxation and more effective control in free trade zones feature among BAT recommendations for the prevention of illicit trade problems, Hobbs said.