Any further large increase in the excise duties on cigarettes in Ukraine will result in a reduction in their legal sales and an increase in cigarette smuggling, Director for Corporate Relations at Philip Morris Ukraine Tetiana Karpova said at a first meeting of the Investment Council at the Income and Tax Ministry of Ukraine held in Kyiv on June 21, 2013.
She noted that over the past four years, excise duties were increased
by 12 times, from Hr 14 to Hr 217 per 1,000 cigarettes, and the legal
market fell from 88 billion cigarettes to 78 billion cigarettes a year.
Karpova said the increase in the excise duty has led to cheaper
cigarettes from Russia, Moldova and Belarus, where the excise duty rates
are lower, pouring into the Ukrainian market.
The representative of Philip Morris Ukraine said that the company,
along with the other three global players who have production facilities
in Ukraine, will pay Hr 19 billion to the budget, while the losses
from the expanding illegal market are assessed at no less than Hr 1.5
billion.
Karpova called on the ministry to jointly combat the illegal
cigarette trade, including via the electronic monitoring of products and
an increase in the level of protection of intellectual property.
“We should stop trucks [with smuggled cigarettes] from Russia and
Moldova on the customs border, and stop counterfeit production in
Ukraine,” she said.
