Main points
- In Volyn, illegal production of hookah tobacco without permits was discovered, in which residents of Volyn and Lviv regions participated.
- The seized products are valued at over 8 million hryvnias, and a case has been opened under the article on the illegal manufacture and storage of excisable goods.
“BEB covered up an underground workshop for the production of hookah tobacco” / Collage of Channel 24, photo by BEB
A large-scale underground production of hookah tobacco was uncovered in Volyn. Detectives from the Bureau of Economic Security stopped the operation of a workshop where the products were produced in virtually industrial quantities, but without any permits.
What is known about the exposure of clandestine production of hookah tobacco?
According to the investigation, residents of two regions at once – Volyn and Lviv regions – were involved in this scheme, the BEB reported.
- For their “business,” they probably set up warehouses that they turned into a full-fledged factory. There was all the necessary equipment, from preparing raw materials to packaging the finished product.
- There were hired workers working in this shop, but no one officially registered them. In fact, it was a classic shadow scheme without taxes and control.
The organizers paid special attention to product promotion. To do this, they were able to attract bloggers and actively used marketing to quickly find buyers and sell products in large quantities.
During the searches, law enforcement officers came across impressive amounts.
- More than 22,000 packages of hookah tobacco were seized – about 2.2 tons of finished product.
- The warehouses still held approximately 3 tons of raw materials, as well as various flavorings, additives, packaging, and production equipment.
According to preliminary estimates, all “shadow production” is worth more than 8 million hryvnias. All seized property has already been seized.
The investigation is currently ongoing. A case has been opened under the article on illegal production and storage of excisable goods. Law enforcement officers are identifying everyone who was involved in organizing this underground production.
How will the price of cigarettes increase in Ukraine?
The increase in excise duty on cigarettes in Ukraine is taking place within the framework of European integration. The changes in April will add 8-10 hryvnias to the price of a pack. Economist Oleg Getman said this in a commentary on Channel 24 .
According to the expert, the main excise tax increases are planned in the Tax Code and will take place in the coming years. Thus, the tax will approach the minimum rate of the European Union.
Oleg Getman
Economist, coordinator of expert groups of the Economic Expert Platform
In April, it's just a small technical increase. All major increases will be from January 1st of each year. They bring us closer to the minimum rate of 90 euros per thousand cigarettes. For 2025, we already have about 80 euros, 2026 – 86 euros, 2027 – about 90 and on the 28th we reach the minimum EU level.
As the economist explains, the April increase is technical, because the share of excise duty in the retail price of cigarettes is less than the required 60%. To reach the required level, a coefficient of 1.1 is applied to the minimum excise tax liability. Accordingly, the excise duty automatically increases by 10%.
According to Oleg Getman, each subsequent stage of excise tax increase will, on average, increase the price of cigarettes by approximately 15–20 hryvnias .
From the current price of a pack, they will increase by 20 hryvnias twice, and they should stop somewhere at this level. It will probably be no more than 200 hryvnias for a pack of good cigarettes,
– the expert suggests.
Other business violations exposed by BEB
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In Poltava region, a suspected tax evasion scheme by the supermarket chain “Marketopt” through “splitting the business into more than 3,500 individual entrepreneurs” was exposed. The scheme allowed avoiding the tax burden by registering individual entrepreneurs under false names and making part of the payments “in envelopes”.
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In the Odessa region, a scheme for the illegal sale of alcohol and cigarettes, which was carried out by an entrepreneur from the Bilhorod-Dnistrovskyi district, was exposed. During the searches, more than 5 thousand packs of cigarettes and more than 70 liters of alcohol worth over 1.6 million hryvnias were seized.
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The Bureau of Economic Security conducted over 70 searches, seizing products and equipment worth 30 million hryvnias related to the shadow vaping business. Participants in the scheme avoided paying taxes by splitting the business into various individual entrepreneurs and companies, and laundered money through financial transactions.