Ukraine To Criminalize Tobacco Smuggling Within Two Months

By Sarantis Michalopoulos 

(EurActiv) — A much-awaited draft law criminalizing tobacco smuggling is expected to be approved by the Ukrainian parliament by the end of the year or in early 2020, the Mission of Ukraine to the EU told EURACTIV.com.

The Mission said the draft law on “Criminalisation of Illegally Imported Excise Goods”, including tobacco products, envisages a significant increase of fines for such illegal activity as well as criminal liability for it.

“Thus, for the first offence, the fine will be from 3,000 to 5,000 tax-free minimums, of course, with confiscation of goods. Then, from 5,000 to 10,000 tax-free minimums for smuggling committed in an organised group – from 15 to 25 thousand tax-free minimums,” the Ukraine mission said.

The EU has been putting pressure on Kyiv for a long time now to criminalise tobacco smuggling, which is also part of the framework of the EU-Ukraine Association Agreement.

Although there has been a decrease in the number of cigarettes seized from Ukraine in 2018 compared to 2017, Brussels insisted that without criminalising tobacco smuggling one should not expect any positive result.

“Besides, the Head of the Customs Service, Mr Maksym Nefiodov, advocates for the return to customs divisions the functions of operational investigative activity and the increasing of responsibility for smuggling, in particular for highly marginal goods. He noted that now the illegal movement of goods is punishable by the seizure of goods and a fine of 100% of their value,” the mission told EURACTIV.

A working party

Earlier this month, President Volodymyr Zelensky met with the tobacco industry in Kyiv to discuss the topic and then the Ukrainian ministry of economy decided to set up a working party, which includes representatives of both business and government.

This working party will be responsible for tackling trade in illegal tobacco.

Asked if this working party will be in charge of identifying the companies responsible for illegal activities and sanctions against them, the mission of Ukraine replied: “It is focused mainly on policy and is not tasked with law enforcement.”

The parties are currently preparing a Memorandum of Understanding, which will address such issues as counterfeiting, and demonopolisation the mission added.

Speaking to EURACTIV on the sidelines of the ‘Liberty Summit’ in Kyiv, organised by the European Conservatives and Reformists (ECR), James Wharton, a former UK Government Minister, said the high punitive rates of tax that have created this market.

“The reality, though, is that if you don’t properly police borders, there will problems […] and if you continue to have hugely disproportionate sort of mismatched tax rates in different EU states on tobacco products, there will be an incentive to do it,” he said.

In the case of Ukraine, he said the reality is that while steps are being taken, more needs to be done and suggested the strengthening of the border controls and criminalizing the act itself.