30 F-16 fighters could be bought for unpaid taxes on illegal cigarettes - media

Shadow trade in tobacco products led to budget losses of UAH 42.5 billion (over USD 1 billion) in 2022-2023.

This is reported by Business.Censor publication with reference to the statement of the American Chamber of Commerce in Ukraine (ACC).

"The losses of the State budget from illegal markets in various sectors of the economy are huge. The shadow trade in tobacco products alone led to budget losses in the amount of UAH 42.5 billion (over USD 1 billion) in 2022/23. Thirty F-16 fighter jets, which are critically needed for the protection of the sky over Ukraine, could be purchased with these funds," ACC said.

According to the association, the elimination of shadow markets will ensure a level playing field for business in Ukraine and increase investment attractiveness.

"In order to finance the fight for victory, Russia must pay, and the shadow economy must be liquidated," the message reads.

As noted with reference to the Kantar Ukraine study, as of the first quarter of 2024, the overall level of illegal tobacco trade in Ukraine has decreased to 19.1% (compared to 25.7% at the end of 2023), but it still remains extremely high. Annual budget losses are estimated at UAH 24 billion. The volume of the shadow cigarette market in Ukraine is 7 billion pieces.

Most of the tobacco products (57%) that are labeled Duty Free or intended for export, and are sold illegally in Ukraine, have an inscription stating that the producer is the Vynnyky Tobacco Factory. Almost half of this group of illegal products are Compliment cigarettes labeled Duty Free (45%).

The reduction of the shadow cigarette market may be connected with the strengthening of state control over the sale of illegal products.

In mid-May, the Bureau of Economic Security detectives conducted 24 simultaneous searches at the factories and warehouses of four cigarette manufacturers who are suspected of illegally manufacturing tobacco products and their further sale in Ukraine and EU countries. Among them is the Vynnyky Tobacco Factory.

During the searches, detectives discovered production lines and more than 1 million packs of cigarettes "Compliment", "Marshal", "URTA", "BRUT", "BL", "Marvel", etc. without excise tax stamps.