THE PROBLEM OF TOBACCO PRODUCTS SMUGGLING IN UKRAINE

Abstract

The problems associated with the illegal importation of cigarettes from Ukraine to the EU member states are considered. New challenges arising from the increase in smuggling are highlighted. One of the main reasons for this trend is the ongoing conflict in Ukraine, which is exacerbating the country’s fragile economic situation, accompanied by rising unemployment due to the destruction of production facilities and infrastructure, the severance of economic and social ties among different parts of Ukraine, and the decline of the financial, banking, transport and communication systems. Conflict, a weakened government and law enforcement agencies are creating new challenges that make it difficult to address the current situation with cigarette smuggling in Ukraine. These challenges require the Ukrainian government to implement new measures to combat smuggling within the country. Various areas of anti-cigarette smuggling efforts have been outlined, including increasing excise duties, developing anti-corruption programmes and cooperating with European customs and law enforcement agencies. At the same time, the initiatives of the State Border Guard Service and the State Fiscal Service of Ukraine to combat smuggling are hampered by the continuing instability and lack of resources. The following approaches and measures are proposed to address these problems. Firstly, the formation of a single tobacco products market (bringing excise and value added tax rates on tobacco and tobacco products to a basic (uniform) level in all countries involved in export and import operations with tobacco products); harmonization of administrative and criminal liability for illegal imports of tobacco and tobacco products; introduction of mandatory uniform labelling of tobacco products; implementation of tracking of cross-border movement of tobacco and tobacco products; elimination of existing barriers, exemptions and restrictions on the movement of tobacco and tobacco products). Secondly, measures to combat illicit trafficking in tobacco and tobacco products should include the following components: criminalization of the illegal import/export of tobacco and tobacco products; organization of remote monitoring of vehicles transiting from one part of the EU customs territory to another through the territory (optimally using electronic navigation seals); and establishment of customs control as a mandatory stage of transit registration through the territory of Ukraine clarification of information on the destination of transit (for all goods, including tobacco and tobacco products).