Excise increase likely to boost Ukraine’s already growing illicit tobacco trade

The market for licit cigarettes in Ukraine could shrink to 74-75 billion this year from 80 billion in 2012, according to a Kyiv Post story quoting the director for corporate issues at Imperial Tobacco Ukraine (ITU), Yuriy Kyshko.

Briefing reporters, Kyshko said that last year had seen growth in the domestic-market consumption of both smuggled and counterfeit cigarettes.

The further increase that was expected this year in the share accounted for by illicit products was linked to the introduction of new excise duties and changes in the structure of taxes from January 13, added ITU’s CFO, Volodymyr Antypenko.

Antypenko said that ITU and Philip Morris Ukraine had increased the prices of their cigarettes but that other companies had not, perhaps because they had large amounts of cigarettes in the supply chain or because they were hoping the law increasing excise duties would be not signed by the Ukrainian president.