Every tenth fire in Ukraine is caused by an influx of illegal electronics

28/ 10/ 2020

On October 28, the Interfax-Ukraine news agency held a press conference on the “Illegal market of risky goods in Ukraine: economic and consumer danger of electronics.” Participants provided statistics on the causes of fires due to equipment fires, and figures of penetration of illegal import into the electronics industry in Ukraine in 2020, which demonstrated the growth of the shadow market of this industry. Sofia Araslanova, the General Director of the Ukrainian Importers of Consumer Electronics Association, cited data from Ukraine Economic Outlook, a study conducted by the Independent Macroeconomic Analysis and Forecast Group, which shows that the equipment and electronics product has the largest share in the total smuggling volume and amounts to 21.4% from all goods imported illegally. The consequences of such a dangerous trend were illustrated by the statistics of Yevhen Linchevskyi, Head of the Department of Emergency Prevention of the SES of Ukraine Yevhen Linchevskyi. Thus, according to him, every tenth fire in Ukraine occurs due to a violation of fire safety rules during the installation and operation of electric equipment. This reason stands behind 8031 fires, which is 9.3% of the total number of fires. Thus, televisions and refrigerators are the main cause leaders of electronics fires according to the statistics. Yevhen Linchevskyi cited statistics for last year (2019), according to which most fires were caused by the following electrical products: • a TV - 252 fires or 3% of the number of electronics fires; • an electrical panel - 211 (almost 2%); • a refrigerator - 162 (1.4%); • an electric stove - 114 and other heating appliances - 63 cases of fires. According to the expert, 186 people died as a result of fires. The malfunction of electric stoves caused the death of 27 people, and heating appliances - 15 people. Summing up, the Head of the Department of Emergency Prevention of the SES of Ukraine noted that it is necessary to comply with basic requirements for the operation of electrical appliances and use equipment that is officially imported to Ukraine and undergoes all relevant tests and procedures for assessing the compliance with technical regulations. Yevhen Linchevskyi. Head of the Department of Emergency Prevention of the SES of Ukraine. Our safety, and the safety of our children and all Ukrainians, depends on the quality of the electronic devices we use. Victoria Kulykova, Manager of the EBA Consumer Electronics Committee, stressed that Ukraine has a very acute problem with the sale of illegally imported equipment that has not passed conformity assessment procedures in accordance with Ukrainian technical regulations, such as safety of low-voltage equipment or electromagnetic compatibility, and therefore can be dangerous for consumers. Such equipment may have different parameters of power supply or plug connection of the device than those used in Ukraine, and their change may lead to failure of the device or short circuit. Among other risks for consumers, Victoria noted the possible lack of free warranty service, as well as paid repairs due to the fact that spare parts for such a device are not supplied to Ukraine, or lack the necessary documentation for its repair. Ms. Kulykova mentioned the fiscal check and the presence of Ukrainian language markings on goods and equipment as the main tool that can help consumers identify illegally imported goods. According to Victoria, the fiscalization of the household appliances and electronics market in 2017 was the right step towards the de-shadowing of the economy, as well as the de-shadowing laws № 128 and 129 adopted at the end of last year, which finally abolished the fine of 1 hryvnia for failure to issue a fiscal check and provided the possibility for the consumer to receive a cashback in case he was issued a counterfeit check. Thus, the norm on cashback should start working next year and can significantly improve the situation with the sale of illegally imported equipment and improve the situation with consumer protection. Unfortunately, in August of this year, the draft laws 3853-1 and 3853-2 were registered in the Parliament, proposing to abolish both the possibility of cashback and the need to issue a fiscal check when selling household appliances and electronics in general. Victoria Kulykova. Manager of the EBA Consumer Electronics Committee. We hope that the voice of law-abiding business will be heard, and reforms aimed at the de-shadowing of the economy and trade in Ukraine will be continued, not reversed, as proposed by the draft laws 3853-1 and 3853-2. “A study conducted by GfK - an expert market survey on the illegal share in sales of electronics and home appliances - showed that most sales (about 80%) were made possible due to abuse of the simplified taxation system, said Sofia Araslanova, the CEO of the Ukrainian Importers of Consumer Electronics Association. Sofia Araslanova. General Director of the Association of Ukrainian Importers of Consumer Electronics . In the electronics and household appliances market, the simplified taxation system has become a scheme for abuse and aggressive tax planning. Although any seller, given the high cost of goods, reaches the limit of using the simplified taxation scheme in a few weeks of sales. “I represent the electronics industry, where the business has to pave its way through the components of a civilized competitive environment, ease of shopping, customer loyalty, level of service, but not tax optimization schemes - summed up Sofia Araslanova. - We hope that the authorities will hear the demands of legal business and continue to de-shadow trade in high-risk areas, it will introduce a set of measures to stop illegal import schemes at customs. Legal business needs institutional reform of regulatory authorities because the presence of corruption in regulatory authorities does not mean that the state should not control a part of the business.” We would like to stress that the size of the shadow in risky industries (electronics, medicines, auto parts, alcohol) is equivalent to UAH 82 billion, which is 30% of the total volume of illegal import and smuggling in Ukraine. In September, a number of business associations appealed to the leadership of the Verkhovna Rada of Ukraine to prevent the repeal of the laws №128-IX and №129-IX on program RSOs (registrars of settlement operations) and transparent business rules. The draft laws №3853-1 and №3853-2 on the abolition of fiscalization, submitted to the Verkhovna Rada in August, were proposed not to be considered and returned for revision. Be the first to learn about the latest EBA news with our Telegram-channel – EBAUkraine.

On October 28, the Interfax-Ukraine news agency held a press conference on the “Illegal market of risky goods in Ukraine: economic and consumer danger of electronics.”

Participants provided statistics on the causes of fires due to equipment fires, and figures of penetration of illegal import into the electronics industry in Ukraine in 2020, which demonstrated the growth of the shadow market of this industry.

Sofia Araslanova, the General Director of the Ukrainian Importers of Consumer Electronics Association, cited data from Ukraine Economic Outlook, a study conducted by the Independent Macroeconomic Analysis and Forecast Group, which shows that the equipment and electronics product has the largest share in the total smuggling volume and amounts to 21.4% from all goods imported illegally.

The consequences of such a dangerous trend were illustrated by the statistics of Yevhen Linchevskyi, Head of the Department of Emergency Prevention of the SES of Ukraine Yevhen Linchevskyi. Thus, according to him, every tenth fire in Ukraine occurs due to a violation of fire safety rules during the installation and operation of electric equipment. This reason stands behind 8031 fires, which is 9.3% of the total number of fires. Thus, televisions and refrigerators are the main cause leaders of electronics fires according to the statistics.

Yevhen Linchevskyi cited statistics for last year (2019), according to which most fires were caused by the following electrical products:

• a TV – 252 fires or 3% of the number of electronics fires;

• an electrical panel – 211 (almost 2%);

• a refrigerator – 162 (1.4%);

• an electric stove – 114 and other heating appliances – 63 cases of fires.

According to the expert, 186 people died as a result of fires. The malfunction of electric stoves caused the death of 27 people, and heating appliances – 15 people. Summing up, the Head of the Department of Emergency Prevention of the SES of Ukraine noted that it is necessary to comply with basic requirements for the operation of electrical appliances and use equipment that is officially imported to Ukraine and undergoes all relevant tests and procedures for assessing the compliance with technical regulations.

Yevhen Linchevskyi Head of the Department of Emergency Prevention of the SES of Ukraine

Our safety, and the safety of our children and all Ukrainians, depends on the quality of the electronic devices we use.

Victoria Kulykova, Manager of the EBA Consumer Electronics Committee, stressed that Ukraine has a very acute problem with the sale of illegally imported equipment that has not passed conformity assessment procedures in accordance with Ukrainian technical regulations, such as safety of low-voltage equipment or electromagnetic compatibility, and therefore can be dangerous for consumers. Such equipment may have different parameters of power supply or plug connection of the device than those used in Ukraine, and their change may lead to failure of the device or short circuit.

Among other risks for consumers, Victoria noted the possible lack of free warranty service, as well as paid repairs due to the fact that spare parts for such a device are not supplied to Ukraine, or lack the necessary documentation for its repair.

Ms. Kulykova mentioned the fiscal check and the presence of Ukrainian language markings on goods and equipment as the main tool that can help consumers identify illegally imported goods.

According to Victoria, the fiscalization of the household appliances and electronics market in 2017 was the right step towards the de-shadowing of the economy, as well as the de-shadowing laws № 128 and 129 adopted at the end of last year, which finally abolished the fine of 1 hryvnia for failure to issue a fiscal check and provided the possibility for the consumer to receive a “cashback” in case he was issued a counterfeit check. Thus, the norm on “cashback” should start working next year and can significantly improve the situation with the sale of illegally imported equipment and improve the situation with consumer protection.

Unfortunately, in August of this year, the draft laws 3853-1 and 3853-2 were registered in the Parliament, proposing to abolish both the possibility of cashback and the need to issue a fiscal check when selling household appliances and electronics in general.

Victoria Kulykova Manager of the EBA Consumer Electronics Committee

We hope that the voice of law-abiding business will be heard, and reforms aimed at the de-shadowing of the economy and trade in Ukraine will be continued, not reversed, as proposed by the draft laws 3853-1 and 3853-2.

“A study conducted by GfK – an expert market survey on the illegal share in sales of electronics and home appliances – showed that most sales (about 80%) were made possible due to abuse of the simplified taxation system,” said Sofia Araslanova, the CEO of the Ukrainian Importers of Consumer Electronics Association.

Sofia Araslanova General Director of the Association of Ukrainian Importers of Consumer Electronics

In the electronics and household appliances market, the simplified taxation system has become a scheme for abuse and aggressive tax planning. Although any seller, given the high cost of goods, reaches the limit of using the simplified taxation scheme in a few weeks of sales.

“I represent the electronics industry, where the business has to pave its way through the components of a civilized competitive environment, ease of shopping, customer loyalty, level of service, but not tax optimization schemes – summed up Sofia Araslanova. – We hope that the authorities will hear the demands of legal business and continue to de-shadow trade in high-risk areas, it will introduce a set of measures to stop illegal import schemes at customs. Legal business needs institutional reform of regulatory authorities because the presence of corruption in regulatory authorities does not mean that the state should not control a part of the business.”

We would like to stress that the size of the shadow in risky industries (electronics, medicines, auto parts, alcohol) is equivalent to UAH 82 billion, which is 30% of the total volume of illegal import and smuggling in Ukraine. In September, a number of business associations appealed to the leadership of the Verkhovna Rada of Ukraine to prevent the repeal of the laws №128-IX and №129-IX on program RSOs (registrars of settlement operations) and transparent business rules. The draft laws №3853-1 and №3853-2 on the abolition of fiscalization, submitted to the Verkhovna Rada in August, were proposed not to be considered and returned for revision.

Be the first to learn about the latest EBA news with our Telegram-channel – EBAUkraine.