Legal business versus shady market

18 Feb

or how Ukraine lost 10% of the Covid Fund last year – almost UAH 5.3 billion – due to illegal trade of tobacco products.

Taras Korniyachenko, CEO TEDIS Ukraine 

“In Ukraine trade of contraband and counterfeit tobacco products are growing at a record” – this is a quote from the news, dedicated to the results of a new monitoring study by the company “Kantar Ukraine”. Check it out here. From this document, you can, for example, learn that the weighted average level of illegal trade in tobacco products at the end of last year was 6.9%. According to data obtained in October 2020, the level continued to rise and reached 10% due to the rapid increase in the share of counterfeit products – up to 4%. It got to the point that Ukraine has become the largest supplier of illegal cigarettes on the European Union market – a dubious reason to be proud.

If you look at the entire market in retrospect, year to year, 2020 has set a sad record: the level of sales of illegal cigarettes peaked since 2014. Today, every fourteenth pack of cigarettes sold in our country is of illegal origin. We observe the effect of the Abibas brand – for those who, at the age of 35+, understand what I mean. By the way, “Kantar Ukraine” even indicates brands and manufacturers of contraband products.

In the bottom line, due to illicit trade, our budget lost last year more than 5.3 billion hryvnia in tax revenues – this is almost 10% of the so-called “Covid Fund” of the country. This money passed by the state treasury. While our company paid in 2020, according to preliminary estimates, over 1.4 billion hryvnia (we will definitely publish the exact amount at the end of the financial year), and TEDIS Ukraine became the first in the country in terms of the amount of paid retail excise tax. This tax contribution is the result of the daily work of the company with 2,300 employees, its own fleet of 400 commercial vehicles, and storage areas like 4 football fields of the NSC Olimpiyskiy.

Unlike the shadow market, we have been working legally since our founding – February 18, 2010 to this day, paying salaries to employees day in and day out, and taxes to the state. But how many over the same ten years the shadow market for tobacco products has hidden money from the state can only be imagined. It will be possible to build a strong economy and an attractive investment climate in the country under the obligatory condition that counterfeiting and smuggling are eliminated as negative phenomena.