“Counterfeit tobacco is a loss for the budget / photo REUTERS The European press periodically began to appear in publications expressing concern about the illegal tobacco market in Ukraine. At the same time…”, — write: www.unian.ua
Counterfeit tobacco is a loss for the budget / photo REUTERSPublications expressing concern about the illegal tobacco market in Ukraine began to appear periodically in the European press. At the same time, these publications demonstrate a direct connection between Western aid to Ukraine and its inability to fill its own budget, as well as its inability to protect Western countries from counterfeiting and smuggling. This is reported by RBC-Ukraine.Yes, Doctor of Philosophy, Senior Researcher of the Eurasian Program of FPRI, Stephen J. In his article in Eurreporter, Blank noted that in 2020, Ukraine overtook China and became the largest source of illegal tobacco in Europe and remains so.
“For Ukraine, the illegal trade in tobacco products has resulted in revenue losses of as much as 20.5 billion hryvnias (about 480 million euros) in unpaid or underpaid taxes in 2022,” says Stephen J. Form.
According to his data, the legal volume of cigarettes fell by 46% between 2018 and 2022, and the share of illegal trade increased from 2% in 2017 to a record high of 25.7% in October 2023.
“Illegal cigarettes, which made up a quarter of Ukraine’s tobacco market, are depleting valuable resources needed to help Ukraine defend itself against Russia’s ongoing incursion. The Ukrainian government has lost hundreds of millions of dollars in tobacco tax revenue amid the steady growth of this criminal industry,” – says the article of the American publication The Hill.
The European Anti-Fraud Office said the Russian invasion of Ukraine has expanded tobacco smuggling routes, creating a problem across the European Union. Due to the distribution of these illegal products, EU member states have also lost hundreds of millions of euros in budget revenue.
“European and Ukrainian authorities must cooperate to curb the problem of illegal tobacco,” the publication notes.
One of the reasons for the emergence and flourishing of the illegal market is the inaction of the law enforcement system. A vivid example is the Vinnykiv tobacco factory (VTP) in the Lviv region. According to research company Kantar, it was and remains one of the largest producers of illegal cigarettes and one of the largest tax evaders.
As Forbes magazine learned, the ambassadors of the “Big Seven” (G7) countries sent letters to the Prime Minister of Ukraine, the head of the President’s Office and a number of other government officials and parliamentarians with the demand to strengthen the fight against counterfeit excise goods. According to the ambassadors, the fight against counterfeiting should help restore lost revenues.
“We call on Ukraine to define a clear strategy, tasks and time frames for the actions of law enforcement agencies and state authorities to combat illegal trade in these priority sectors. The Bureau of Economic Security of Ukraine and the State Tax and Customs Services are an integral part of achieving this goals,” the letter says.