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Business observes the steps in the fight against the illegal tobacco market but fair court decisions are also needed

28/ 09/ 2022
  The existence of the illegal tobacco market distorts fair competition and is a big problem for the country and, particularly, its economy, which has been emphasized by transparent businesses operating in Ukraine for a long time. Thus, according to the Monitoring of Illegal Tobacco Trade in Ukraine by Kantar, as of October 2021, counterfeits accounted for about 17% of the overall structure of the tobacco trade (and in 2020, the share of such products reached 6.9%). With such volumes of illegal trade, the annual losses of the state budget from unpaid taxes are estimated at more than 15.5 billion hryvnias. Over the past several years, the European Business Association has repeatedly appealed to state authorities and law enforcement agencies to introduce effective measures to detect illegal enterprises, promote an effective fight against the shadow sector of the economy, and to consider increasing responsibility for the production and trade of illegal tobacco products. Unfortunately, until recently, this problem did not receive due attention. At the same time, from August-September 2022, quite active actions of law enforcement agencies are observed in the country to detect the shadow market of tobacco products. The law enforcement units identified a number of places of production of illegal tobacco products, in particular in the Odesa region and Dnipro, and seized significant quantities of counterfeits of well-known global brands, raw materials, equipment, and packaging used in the production of illegal products. So far, several rather large-scale cases have been brought to court and transparent business hopes for fair and legal decisions that will lead to a reduction in the share of illegal tobacco products by the end of this year. Moreover, business expects active actions to combat shadow markets in other sectors of the economy, because, according to various estimates, its level is from 30% to 60% depending on the sector, which, of course, greatly undermines the economic stability of the country, which, therefore moreover, it is unacceptable at such a difficult time for the country. For its part, a conscientious business is ready to cooperate with law enforcement agencies in order to establish the amount of material damage caused, including to the state, as a result of such illegal production and trade in illegal tobacco products that were seized during the said operations.

The existence of the illegal tobacco market distorts fair competition and is a big problem for the country and, particularly, its economy, which has been emphasized by transparent businesses operating in Ukraine for a long time.

Thus, according to the Monitoring of Illegal Tobacco Trade in Ukraine by Kantar, as of October 2021, counterfeits accounted for about 17% of the overall structure of the tobacco trade (and in 2020, the share of such products reached 6.9%). With such volumes of illegal trade, the annual losses of the state budget from unpaid taxes are estimated at more than 15.5 billion hryvnias.

Over the past several years, the European Business Association has repeatedly appealed to state authorities and law enforcement agencies to introduce effective measures to detect illegal enterprises, promote an effective fight against the shadow sector of the economy, and to consider increasing responsibility for the production and trade of illegal tobacco products. Unfortunately, until recently, this problem did not receive due attention.

At the same time, from August-September 2022, quite active actions of law enforcement agencies are observed in the country to detect the shadow market of tobacco products. The law enforcement units identified a number of places of production of illegal tobacco products, in particular in the Odesa region and Dnipro, and seized significant quantities of counterfeits of well-known global brands, raw materials, equipment, and packaging used in the production of illegal products. So far, several rather large-scale cases have been brought to court and transparent business hopes for fair and legal decisions that will lead to a reduction in the share of illegal tobacco products by the end of this year. Moreover, business expects active actions to combat shadow markets in other sectors of the economy, because, according to various estimates, its level is from 30% to 60% depending on the sector, which, of course, greatly undermines the economic stability of the country, which, therefore moreover, it is unacceptable at such a difficult time for the country.

For its part, a conscientious business is ready to cooperate with law enforcement agencies in order to establish the amount of material damage caused, including to the state, as a result of such illegal production and trade in illegal tobacco products that were seized during the said operations.

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