The American Chamber of Commerce in Ukraine (AmCham Ukraine) is actively and consistently working on the issue of combating the shadow economy in Ukraine, particularly the illegal market of excisable goods. Illegal production and distribution of tobacco products is one of the key elements of the shadow economy in Ukraine, which harms bona fide business, distorts competition and negatively affects the country's economy. AmCham unites 4 international companies of the tobacco industry, that are consistently among the top largest taxpayers in Ukraine – BAT Ukraine / B.A.T. - Prylucky Tobacco Company, JTI Ukraine, Imperial Tobacco Ukraine, Philip Morris Ukraine. In 2023, these companies paid 106 billion UAH worth of taxes overall.
At the same time, in 2022-2023, during Russia's full-scale war against Ukraine, due to the activities of the shadow sector, the State Budget under received more than UAH 42.5 billion in tax revenues, and the size of the shadow market continued to grow. Therefore, effective fight against illegal trade of excisable goods is crucial for the AmCham member companies.
AmCham member companies’ experts welcome the latest news on the active work of the Economic Security Bureau of Ukraine and other law enforcement agencies to identify and suppress the illegal production of tobacco products. It is extremely important that enterprises engaged in the production of excisable goods in violation of the current legislation, including licensed enterprises, not only cease their illegal activities but also do not have the opportunity to resume them in the future.
We are grateful to Member of Parliament Danylo Hetmantsev, Head of the Parliamentary Committee on Financial Issues, Tax and Customs Policy and the Prosecutor General’s Office, for their leadership in the fight against the illegal tobacco market. We will continue to closely monitor further developments as further coordinated and systematic work of law enforcement bodies and other state authorities will help prevent future significant State Budget losses and ensure equal working conditions for all market participants.
According to the results of the latest KANTAR Ukraine study as of March 2024, the share of the illegal market of industrial cigarettes in Ukraine decreased by 6.6% and amounted to 19.1% of the total market.
Regardless of the current decrease in the level of the illegal tobacco market, the preliminary assessment of unpaid taxes to the budget of Ukraine reached a new record of UAH 24 billion in 2024, considering the increase in the excise tax rate from January 1, 2024.
We are cautiously optimistic about the current results because at the end of 2022, we have already seen a temporary decrease in the level of the illegal market to 17.8%, with a further increase to 20.2% at the beginning of 2023 and a record 25.7% at the end of 2023. At the same time, we are convinced that any authority in a country at war should work. AmCham position is very clear - we must move from words to actions and make efforts to fill the state budget, build trust with business, attract investments, and establish cooperation with international partners.
