Excise revenues must be secured through market de-shadowing, not pressure on lawful businesses — ICC Ukraine
The International Chamber of Commerce (ICC Ukraine) has issued an open statement addressed to the International Monetary Fund, the U.S. Embassy in Ukraine, and the Delegation of the European Union to Ukraine regarding the illicit cigarette market in the country. The document stresses the need to de-shadow the tobacco market, which currently causes annual losses of more than UAH 25 billion for the Ukrainian state budget.
ICC Ukraine emphasized that after the record-high level of illicit tobacco trade in 2023, the ambassadors of the G7 countries urged the Ukrainian government to intensify efforts to combat the shadow market. Despite some progress achieved by law enforcement agencies in 2024, the illicit market share has stabilized at 15.4%, according to Kantar Ukraine. This means that in 2025 the volume of the shadow market is estimated at 5.3 billion cigarettes. As a result, tax evasion leads to annual state budget losses amounting to UAH 25.6 billion.
At the same time, experts forecast a shortfall of approximately UAH 7 billion in tobacco excise revenues this year compared to the plan. This is driven by two key factors. First, a significant increase in the illicit tobacco market. Second, the fact that the Verkhovna Rada unexpectedly raised the annual excise revenue plan by an additional UAH 8.8 billion in August 2025.
"Strengthening enforcement against illicit trade is a more sustainable and effective way to secure excise tax revenues from tobacco products than increasingly directing pressure toward compliant businesses that already pay significant amount of taxes. This would both safeguard fiscal stability as well as support Ukraine’s EU integration process and fulfilling commitments with IMF," the ICC Ukraine statement reads.
