Economic Security Bureau of Ukraine has summarized the results of its work on combating illicit tobacco trafficking for 6 months of 2023.

Detectives focused on detecting the movement of large batches of illegal cigarettes, supply and distribution chains and searching for counterfeit production sites. The analysts in turn identified gaps in the legislation and provided proposals that would reduce the possibility of creating schemes for the illegal production of tobacco products.

The Acting Director of the ESBU emphasized the role of industry experts, business associations and representatives of manufacturers whose involvement in discussing the problems gives a positive result.

"Meetings with business representatives are becoming regular. This is a significant help with information we need to get feedback from white business. Our task is first and foremost to stop illegal schemes and ensure an increase in revenues to the State budget of Ukraine. Those who work within the law should not lose volumes due to counterfeiting," said Eduard Fedorov.

In the first half of 2023, the ESBU's performance in combating illicit tobacco trafficking increased significantly: 76 criminal proceedings were initiated, 42 people were notified of suspicion and 26 cases have already been sent to court. Fifteen verdicts have been handed down and the remaining proceedings are under active investigation.

Detectives of the ESBU seized 6 industrial production lines in Odesa, Lviv, Mykolaiv, Zakarpattia, Kyiv, Poltava and Poltava regions. In the latter region a workshop for the manufacture of handicraft equipment for mini-productions was also found.

A large batch of e-cigarettes and tobacco mixtures worth almost UAH 100 million was seized in Kyiv region.

In Lviv region ESBU stopped the activities of an illegal channel for the supply of e-cigarettes from the Far East and their illegal transportation in Ukraine. As a result of 15 searches the ESBU seized products worth UAH 96 million.

ESBU initiated the blocking of 38 websites through which illegal tobacco products were sold by applying to the State special communications service.

A total of 1.7 million packs of cigarettes and 321 thousand e-cigarettes were seized in the first six months of 2023. In addition, hookah mixtures, excise tax stamps with signs of counterfeiting, liquids for filling electronic tobacco devices, raw materials, etc. were seized.

The total estimated value of the goods and equipment seized over six months is over UAH 750 million. Together with the results of 2022, it already reaches UAH 1.4 billion and the number of seized cigarettes is 6.1 million packs.

"Analysts estimate the state's losses from illegal tobacco trafficking at billions of hryvnias. We have to reduce this figure step by step and return the production and sale of cigarettes to the legal channel with the payment of all taxes," said Eduard Fedorov.

Based on the results of the ESBU's information and analytical activities and assessment of threats to the economic security of the state, letters were sent to the Cabinet of Ministers of Ukraine and the Verkhovna Rada committee on finance, taxation and customs policy regarding changes to the regulatory framework.

Analysts of the ESBU propose to develop a mechanism for regulating the payment of excise tax on tobacco raw materials during its import as well as to amend the Tax code of Ukraine in terms of setting deadlines for the manufacture of excisable goods from imported raw materials and streamlining their application.