Positive changes in the sphere of combating illegal trade in tobacco products

28.05.2015
On 27 May 2015, a working meeting of representatives of the State Fiscal Service of Ukraine and the Ukrtiutiun Ukrainian Association of Tobacco Manufacturers took place. At the meeting, positive changes, which occurred recently in the sphere of struggling against illicit circulation of tobacco products, were discussed, and the further steps in this work were determined.

 

The problem touched upon during the working meeting remains topical for Ukraine. The illicit trade in tobacco products leads to the cutbacks of the volumes of legal production, tax revenues to the state budget and, what is more important, endangers the health of the consumers who use illegally manufactured (counterfeit) or illegally imported tobacco products (contraband).

Consequences of the illicit trade in tobacco products

The participants of the meeting pointed out a number of positive changes in the struggle against the illicit trade in tobacco products that had occurred in Ukraine recently. According to the nationwide research of the Taylor Nelson Sofres Ukraine analytical company, the volume of illegal cigarettes at the Ukrainian market * in the first quarter of the year 2015 reduced up to 3.1 per cent of the total consumption. For comparison, the average annual indicator of the volume of illegal cigarettes in Ukraine in the year 2014 was 5.6 per cent, while in the year 2013 - 8.5 per cent. In addition, in the second and third quarters of the year 2013, the illicit circulation amounted to the record 9.2 per cent.

 

The representatives of the State Fiscal Service about the effective cooperation of the tobacco industry and the government authorities in overcoming the problem of illegal trade

One of the main reasons for the reduction of illegal circulation of cigarettes at the end of 2014 - the beginning of 2015 was the effective cooperation of the authorities and the tobacco industry. For example, quite a number of the channels of illegal trade in tobacco products were liquidated due to the efforts of the State Service of Ukraine with the assistance of  the Ukrtiutiun Ukrainian Association of Tobacco Manufacturers. In particular, the Kuchurgany and Platonove crossing points on the Transnistrian section of the border between Ukraine and Moldova were closed for the import and export operations with tobacco products, the work of several clandestine tobacco production facilities was suppressed​​, the Action Plan to Combat the Illegal Trade in Tobacco Products for 2015 was developed. The document provides carrying out the measures to struggle against the illegal import of tobacco raw materials, tobacco products and the equipment for their manufacturing to the customs territory of Ukraine and introducing the electronic monitoring system for the manufacturing and circulation of tobacco products based on the Codentify technology. The plan also determines the measures of combating the retail trade in the tobacco products imported illegally into the customs territory of Ukraine and manufactured illegally.

To strengthen the further cooperation between the government authorities and the tobacco industry, and in accordance with the above mentioned Action Plan, in April 2015, the Memorandum on cooperation between the State Fiscal Service of Ukraine and the Ukrtiutiun Ukrainian Association of Tobacco Manufacturers  in the sphere of responsible storage of the property, which has been withdrawn as the material evidence within criminal proceedings on the facts of illicit manufacturing of tobacco products or illegal import of the equipment for the industrial manufacturing of tobacco products to the customs territory of Ukraine was signed. This Memorandum aims at preventing the use of the confiscated equipment for the manufacturing of counterfeit tobacco products.

Summing up the results, the participants of the meeting emphasised the necessity of the further close collaboration in the struggle against the illegal circulation of tobacco products, first of all, through the implementation of a number of the follow-up actions within the approved Action Plan. The participants of the meeting also expressed confidence that the State Fiscal Service of Ukraine and the tobacco industry should be completely open to the society in the matters of cooperation concerning overcoming the illegal trade in tobacco production.

Oleg Strekal, Corporate Affairs Director at Imperial Tobacco in Ukraine, Moldova and the Caucasus countries (Georgia, Armenia and Azerbaijan):

‘The level of the shadow trade depends, first of all, on the predictability of the regulatory environment and the deliberate excise policy. Any drastic legislative changes or ill-conceived excise innovations are a guaranteed way to the growth of illegal circulation of tobacco products and billion losses of the state budget.’

The contribution of the authorities in overcoming the illegal trade in tobacco products.