The International Chamber of Commerce (ICC Ukraine) has issued an open statement addressed to the IMF, the U.S. Embassy in Ukraine, and the EU Delegation. In the statement, the organization draws attention to the alarming scale of the illicit cigarette market, which deprives the state of more than UAH 25 billion in tax revenues annually.
The text emphasizes that after the record surge of illicit trade in 2023, the ambassadors of G7 countries urged the Ukrainian authorities to intensify efforts to combat the shadow sector. Despite certain progress by law enforcement agencies in 2024, the share of the illicit market, according to Kantar Ukraine, has stabilized at 15.4%. This means that in 2025 the size of the shadow market is estimated at 5.3 billion cigarettes. Consequently, due to unpaid taxes, annual losses to Ukraine's State Budget reach UAH 25.6 billion.
In addition, according to industry estimates, this year the state is expected to fall short of the planned tobacco excise revenues by around UAH 7 billion. This is explained by two main factors. First, a significant increase in the illicit tobacco market. Second, the fact that in August 2025 the Verkhovna Rada unexpectedly raised the annual budget revenue plan by an additional UAH 8.8 billion.
"Strengthening enforcement against illicit trade is a more sustainable and effective way to secure excise tax revenues from tobacco products than increasingly directing pressure toward compliant businesses that already pay significant amount of taxes. This would both safeguard fiscal stability as well as support Ukraine's EU integration process and fulfilling commitments with IMF," the ICC Ukraine statement reads.
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