As of June this year, the share of illegal tobacco products in the total market in Ukraine amounted to 19.5%, slightly down from 20.2% in February, but the share of Duty Free labeled products even slightly increased to 10.9% from 10.8%, according to the latest study “Monitoring of the Illegal Trade in Tobacco Products in Ukraine” by Kantar Ukraine.
According to Kantar’s preliminary estimates, presented this week at a roundtable organized by the American Chamber of Commerce with the participation of representatives of the US and Japanese embassies, government officials, the Ukrtyutyun Association and business, the losses of the state budget in 2023 from the illegal tobacco market are estimated at more than UAH 21 billion.
It was noted that the share of counterfeit products remained significant in June – 6.9%, while in February it was estimated at 7.9%.
At the roundtable, KPMG also presented its research on the markets for illegal tobacco products in Ukraine, the EU, the UK, Norway, Switzerland and Moldova in 2022. According to the report, Ukraine is the second largest market for the consumption of illegal tobacco products in Europe, and budget losses amounted to almost UAH 26 billion.
The roundtable participants called for intensifying efforts to combat the illegal production and trafficking of tobacco products and establishing coordination between the competent authorities. In particular, as noted in the release of the American Chamber of Commerce, it is important to adopt the necessary amendments to the legislation on criminalization of tobacco smuggling, improve mechanisms for prosecution for actions related to the illegal production and trafficking of cigarettes, and create an effective system of control over the storage and destruction of confiscated products and equipment.
It is specified that the event was attended by the member companies of the Chamber’s special platform on hard excisable goods, which in 2022 paid over UAH 78 billion in taxes: “Philip Morris Ukraine, V.A.T.-Pryluky, J.T. International Company Ukraine, and Imperial Tobacco Ukraine.
As reported, in June 2020, Kantar estimated the share of the illegal tobacco market at only 5%, but by August 2022, it reached 21.9%. At the same time, smuggling decreased from 3% to 1.8%, while counterfeit products increased from 1% to 8%, and duty-free labeled products from 2% to 12.2%.
