First HTP smuggled out of China found in Ukraine

Experts explain this with a sudden increase in excise tax on heated tobacco products (HTP) since January 2021 (4.2-fold).

For the first time, the HTPs smuggled from China were found in retail stores in Ukraine, reports UNIAN.

So far only traditional cigarette smuggling has been registered on the Ukrainian market.

There were no smuggled and counterfeit HTPs at all.

In particular, they are smuggled Chinese MS brands.

The packs mention that they were made by Hongta Tobacco (Group) Co Ltd. made in china.

There are no excise stamps on the HTP packages.

All warnings are in English.

It is reported that smuggled HTP will be sold at a price of 50 UAH.

At the same time, the price of legal HTP is much higher after a sudden surge in excise duties.

It is noteworthy that this smuggled brand has around 10 flavors in its arsenal – including, for example, blueberry flavor.

Despite the fact that in many countries, flavors (especially fruit, berries) in all tobacco products are restricted by law in order to reduce their diffusion, especially among minors.

Experts attribute the appearance of the smuggled HTP from China on the Ukrainian market to a sudden increase in the excise duty on these products.

“The logic of some of our parliamentarians is absolutely incomprehensible to me. Taxes are not immediately increased by 4.2 times for a single product in the world. The first batch of Chinese HTPs smuggled into Ukraine in January is just a start. There will also be a wave of smuggling from the Russian Federation, Moldova, and the occupied territories of the Donetsk and Luhansk regions – especially since there is a tobacco factory there, ”predicts Oleksandr Yavorskyi, director of the Competitiveness Department of the Federation of Employers of Ukraine.

Tetiana Koschuk, PhD in Economics, a tax expert, also expects some of the demand to move from legal to illegal HTP.

“At the end of last year there were projections of a loss of the state budget of 3 to 5 billion UAH, because the parliament did not support a change in the HTP. But I’m afraid the losses will get higher. Mainly due to the flow of some of the demand from legal HTP for electronic cigarettes (and there is a pretty chaotic situation) and also for smuggled products. It is a shame, because in Ukraine it would be possible to organize the production of sticks for electronic heating – no worse than in Italy, ”said Tetiana Koschuk.

As previously reported, the largest HTP maker – Philip Morris (brand IQOS) – warned earlier this week that a sharp rise in excise duties will force the company to increase its procurement of consumable brands for HTP from the planned 50 million to 50 million reduce 35 million units.

From a tax point of view, the difference of 15 million excise stamps means more than 312 million UAH in consumption tax losses on the state budget.

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