Contraband Crackdown to Boost Russian Budget

Recent measures to strengthen control over the tobacco market could significantly boost Russia’s budget, reports Interfax, citing comments by Finance Minister Anton Siluanov.

“Together, we estimated that the volume of funds mobilized from measures to control the tobacco market could reach about 150 billion rubles [$1.64 billion]. This is a significant amount of a resource that we now need,” Siluanov said at an April 2 meeting of Rosalkogoltabakkontrol, which assumed regulatory authority over the production and circulation of  tobacco and nicotine-containing products on March 1.

Tax-avoiding products accounted for 13 percent of Russia’s tobacco market in 2023, up from 11 percent in 2021, according to Siluanov.

Rosstat data show that tobacco companies produced 198 billion cigarettes in 2023, which is 10.7 percent less than the previous year. In response to Russia’s invasion of Ukraine, some multinationals have exited the market.

Tax authorities expect to collect RUB824.152 billion in excise taxes from tobacco products this year.

As part of its new responsibilities, Rosalkogoltabakcontrol must identify and stop the illegal production and trafficking of tobacco and nicotine-containing products. In addition, it will monitor manufacturer compliance with licensing and mandatory requirements for production, supply and the purchase and transportation of raw materials and finished products.