The illicit tobacco market could cost the budget UAH 28 billion in 2026

 Ukraine continues to lose significant funds due to the illegal production and circulation of tobacco products. According to market participants, in 2025, state budget losses due to the shadow sector's activities amounted to UAH 26.5 billion. If the current trend persists, this amount could rise to UAH 28 billion as early as 2026.

These data were presented during a webinar on countering the illicit tobacco trade, organized by the 'Ukrtutun' Association, with participation by representatives of international tobacco companies, experts, and the Economic Security Bureau of Ukraine.

According to market participants, the share of the illicit cigarette trade stood at 17.6% in February 2026. At the same time, experts estimate that all illegal products are manufactured within Ukraine, with about two-thirds of the volume coming from just two manufacturers. Dnipropetrovsk Oblast is among the regions with the largest share of the shadow economy, accounting for nearly a fifth of the country's illegal market.

At the same time, the legal sector remains one of the critical sources of budget revenue. According to data shared during the event, four international companies generated UAH 177 billion in tax revenues in 2025, which accounts for about 7% of all state budget revenues, while also creating over 100,000 jobs.

Webinar participants paid special attention to the problem of illicit electronic cigarette circulation. According to expert estimates, 93% of the vape market currently operates in the shadow sector. Meanwhile, budget losses from the illegal turnover of these products amounted to UAH 7.6 billion in 2025 and could approach UAH 10 billion by the end of 2026.

“The combination of deep analytics, digital technologies, and timely prevention allows the ESBU to ensure the systemic de-shadowing of the market, increase excise tax revenues, and restore a level playing field for legal businesses. The key to the success of this work is the further development of the ESBU's institutional capacity. Even now, we see a positive dynamic: cash register revenues in March 2026 grew by 14.44%, which indicates a gradual transition of the market out of the shadow sector and increased transparency in the circulation of excise goods,” emphasized Pavlo Buzdyhan.

The ESBU also highlighted that combining analytical work, modern digital tools, and preventive measures allows for increasing market transparency, boosting excise tax revenues, and shaping equal conditions for conducting legal business.