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Tag: Ukraine

  • Putin Seizes Control of JTI’s Russian Operations

    Putin Seizes Control of JTI’s Russian Operations

    Russian President Vladimir Putin placed the Russian assets of Japan Tobacco International (JTI) under temporary administration, transferring control of its stakes in four local businesses to Russian company Industrial Assets. The Nov. 5 decree did not provide a reason for the move. JTI, part of Japan Tobacco Inc., is Russia’s largest tobacco manufacturer by sales volume. The company did not immediately comment.

    The move follows similar actions against foreign companies, including Nestlé, Metro AG, and Auchan, whose Russian assets were placed under temporary management in September. Moscow has increasingly used the measures against companies from countries it considers unfriendly because of sanctions imposed over the war in Ukraine. The decision also comes amid deteriorating relations between Russia and Japan, including Russia’s recent detention of a Japanese journalist on espionage allegations, which Tokyo has denied.

  • Russia Attacks JTI Subsidiary in Ukraine

    Russia Attacks JTI Subsidiary in Ukraine

    Russia’s Defense Ministry said it struck a subsidiary of Japan Tobacco International (JTI) in Ukraine’s Poltava region as part of an attack on Ukrainian defense industry enterprises, port infrastructure, and vessels. Russia alleged the JTI facility was producing ammunition for Ukrainian forces. JTI denied the allegation, saying it manufactures and sells tobacco products and has never been involved in military production.

    JTI said the factory had been struck several times and that operations were suspended before the latest attacks. The company said all employees were safe. The Japanese Embassy in Ukraine said it had no information indicating that any Japanese nationals were affected by the latest attack.

  • Ukraine Alleges Tobacco Company Hid $55M in Taxes

    Ukraine Alleges Tobacco Company Hid $55M in Taxes

    Ukrainian authorities have notified the former director of a tobacco manufacturing company of suspicion in connection with an alleged tax evasion scheme that prosecutors say deprived the state of more than UAH 2.3 billion ($55 million) in excise tax revenue. According to Prosecutor General Ruslan Kravchenko, company officials allegedly organized the production and sale of unaccounted tobacco products outside official tax and accounting records while presenting the activity as legitimate manufacturing.

    Investigators claim that more than 1,186 tons of tobacco raw materials were processed into cigarettes and sold without payment of excise duties, resulting in a substantial tax shortfall identified through tax audits and forensic economic examinations. Authorities further allege that company officials attempted to conceal the illegal use of raw materials by falsifying claims that the tobacco had been stolen. The former director has been charged under Article 212 of Ukraine’s Criminal Code for intentional tax evasion on an especially large scale, an offense that carries financial penalties, potential asset confiscation, and restrictions on holding certain positions. No company has been officially named in the filings; however, some in the Ukrainian media speculate that the company is Kremin Tabako.

  • Ukraine Conducts 70 Raids, Busts Illegal Vape Liquid Operation

    Ukraine Conducts 70 Raids, Busts Illegal Vape Liquid Operation

    The Office of the Prosecutor General of Ukraine and the Bureau of Economic Security of Ukraine have dismantled a large-scale illegal production and distribution network for e-cigarette liquids operating since 2023, Prosecutor General Ruslan Kravchenko said. Authorities allege the group manufactured and sold nicotine mixtures, including non-tobacco flavors banned in Ukraine, through storefronts and online channels with more than 200 people involved.

    Over 70 simultaneous searches across Kyiv and five regions seized flavorings, base liquids, cartridges, pod systems, production equipment, $70,000 in cash, and records, with total assets valued at about UAH 30 million ($690,000). Illegal kiosks linked to the network were dismantled, assets are to be frozen, and further charges are being prepared as investigators map the full network.

  • PMI to Double Zyn Investment in Ukraine

    PMI to Double Zyn Investment in Ukraine

    Philip Morris International said it plans to invest $10 million in 2026 to expand the nicotine pouch category in Ukraine and launch a new line of Zyn, following a $5 million investment in 2025. According to Interfax Ukraine, the company said funds will support portfolio expansion, infrastructure, and adult consumer awareness. The new “dry” pouches contain no water or glycerin, are smaller, less flavored, and range from 1.5 mg to 6 mg nicotine across nine SKUs. Initial supply will be imported from Sweden.

    The company estimates nicotine pouches in Ukraine could grow 20% annually. PMI cited Zyn’s U.S. marketing authorization from the U.S. Food and Drug Administration as supporting further investment. PMI reported that smoke-free products were available in 105 markets at the end of 2025, used by 43 million adult consumers, and accounted for 41.5% of net revenue.

  • Ukraine Moves to Ban Nicotine Pouch Sales to Minors

    Ukraine Moves to Ban Nicotine Pouch Sales to Minors

    Ukraine is preparing to tighten regulation of nicotine pouches through draft law No. 14110-d, which would ban their sale to minors and limit advertising, according to Mykhailo Radutskyi, head of the parliamentary health committee. He said current anti-tobacco laws, aligned with European directives, do not adequately cover newer nicotine products such as pouches and snus, leaving gaps in rules on sales and promotion.

    The proposal, developed by the health committee of the Verkhovna Rada, also addresses broader issues, including enforcement against e-cigarette components entering the market, and pending requirements for larger health warnings on cigarette packs. Radutskyi cited rising tobacco use, particularly among youth, as a key reason to update the legislation.

  • PMI Director: Ukraine’s Flavor Ban ‘Largely Ineffective’

    PMI Director: Ukraine’s Flavor Ban ‘Largely Ineffective’

    The ban on flavoring and aromatic additives in electronic cigarettes in Ukraine, introduced by the Verkhovna Rada in July 2024, has proven largely ineffective due to a lack of enforcement, according to Mykhailo Polyakov, Deputy General Director for Corporate Relations at Philip Morris Ukraine. Speaking at the “Dialogues with NV” event on European integration, Polyakov said illegal vape shops remain widespread, with nine out of 10 shopping centers in Kyiv hosting such outlets. Despite the law formally prohibiting flavored e-cigarettes, no regulatory or law enforcement bodies are actively ensuring compliance, rendering the ban largely symbolic.

    Polyakov also highlighted broader issues in the tobacco sector, pointing out that while parliament has adopted legislative measures intended to curb the illegal market — such as tax posts, video surveillance, minimum price regulations, and production tracking — these measures are often circumvented. Illegal operations exploit gaps in monitoring, opening workshops outside regulated areas, and mislabeling products to avoid taxes or minimum price rules. He expressed hope that international partners, including the IMF, will help strengthen enforcement and ensure that legitimate companies can operate fairly while illegal operators are held accountable.

  • Ukraine’s Illegal E-Cigarette Market Costs $180M in Taxes

    Ukraine’s Illegal E-Cigarette Market Costs $180M in Taxes

    Ukraine’s e-cigarette market is almost entirely illegal, with the shadow market accounting for 93% of consumption, according to Mykola Pasichnyi, professor at the Kyiv National University of Trade and Economics. About 40% of vaping liquids are smuggled, while 60% is counterfeit and locally produced, he said.

    The illicit trade causes the government to lose an estimated 7.5 billion UAH ($180 million) annually in taxes, including excise, VAT, and local levies. Pasichnyi warned that combating this requires stronger enforcement by customs, border guards, and tax authorities, along with dedicated funding.

    Despite the scale of the problem, Ukraine’s draft 2026 budget allocates only an additional 13,500 UAH ($324) for the Bureau of Economic Security and none for customs reform, raising concerns over government priorities. Experts say urgent action is needed to regulate the market, recapture lost revenue, and curb the illegal trade.

  • PMI Ukraine Running at Full Capacity

    PMI Ukraine Running at Full Capacity

    Philip Morris Ukraine is considering exporting cigarettes manufactured at its newly built factory in the Lviv region, company CEO Maksym Barabash said during a roundtable discussion on Ukraine’s economic recovery. Ukraine Business News (UBN) said the PMI factory in Kharkiv, which closed at the outbreak of war with Russia, produced 20 billion cigarettes annually, 50% of which were exported, including to Japan.

    By launching a new $30 million factory in the Lviv region, the company sees the potential to resume exports to geographically close countries. The new factory in the Lviv region opened in May 2024 and features five production lines that this year reached their planned capacity of 10 billion cigarettes per year. This factory has become an important part of the company’s supply chain in Ukraine.

    Philip Morris Ukraine has been active in the Ukrainian market since 1994 and has invested over $750 million in the Ukrainian economy during this time, according to UBN.

  • JT Not Adjusting Russian Business

    JT Not Adjusting Russian Business

    In a statement issued to This Week in Asia, a Japan Tobacco (JT) official said: “As announced in early 2022, the JT Group has suspended all new investments and marketing activities in Russia. At present, the group continues its manufacturing and sales operations in the country in full compliance with all applicable regulations, including but not limited to economic sanctions and export controls. We continue to closely monitor legislative developments as well as the situation on the ground and review our options.”

    JT announcing that it was not pulling out of the lucrative Russian market makes news as the Ukrainian government continues its efforts to get some of the world’s largest companies to exit its combative neighbor. A Ukrainian report said JT contributed $182.3 million in taxes to the Russian government in 2023, fourth among taxpaying companies behind only Austria’s Raiffeisen Bank International ($491 million), China’s Chery Automobile, and Philip Morris, the world’s leading tobacco company.

    International companies that did not exit the Russian market immediately after the invasion of Ukraine began but later pulled out from bad press include Heineken, Citigroup, and Kraft-Heinz.

    JT, which is still one-third owned by the government, faces minimal criticism in Japanese media and as a result, the public – which is strongly supportive of Ukraine – is offering few objections.

    “There has been no comment from the government, no pushback from the public, and nothing in the media,” said James Brown, a professor of international relations at the Tokyo campus of Temple University who specializes in Russian affairs. “So the sense at [JT] headquarters appears to be ‘why should we walk away from it?’

    “The position in Japan was that if being there was not explicitly sanctioned, then it was fine to carry on. And that meant it was not a problem for the company, which was open about what it was doing.”

    In May 2024, Japan Tobacco CEO Masamichi Terabatake made that stance clear when he told the Financial Times that the company’s supply chains had been adjusted to meet international sanctions and that it would remain active in Russia to protect investors’ interests.

    “If worse comes to worst, there is even the risk of a shareholder lawsuit if we were to discontinue a business that we are able to continue,” he said.