Main points
- In Kyiv and Chernihiv region, the BEB exposed a scheme for illegal alcohol production, seizing products worth 4.7 million hryvnias.
- During the searches, more than 45,000 liters of alcohol-containing liquids and 688 liters of ready-made alcoholic beverages were seized.
BEB covered a giant alcohol business / Photo BEB
In Kyiv and Chernihiv region, detectives from the Bureau of Economic Security uncovered a large-scale scheme for the illegal production and sale of alcohol. They seized products, raw materials, and equipment worth approximately 4.7 million hryvnias from illegal circulation.
How did the counterfeit alcohol production scheme work?
This is one of the largest illegal alcohol schemes uncovered in recent times, the BEB reported.
According to the investigation, the participants in the scheme organized a full cycle of illegal trafficking of excisable products:
- alcohol production;
- storage and transportation;
- selling counterfeit goods;
- legalization of funds received through financial transactions.
Searches were conducted in Kyiv and Chernihiv region – in premises where counterfeit alcohol was produced and stored, as well as in vehicles used to transport the products.
During the investigative actions, law enforcement officers seized more than 45,000 liters of alcohol-containing liquids and 688 liters of ready-made alcoholic beverages. The pre-trial investigation is ongoing under articles on the illegal manufacture and circulation of excisable goods, the use of counterfeit excise stamps, and money laundering.
Underground workshop / photo BEB
Underground workshop / photo BEB
Underground workshop / photo BEB
What does this mean?
The exposure of such schemes demonstrates the scale of the shadow alcohol market in Ukraine. Illegal alcohol:
- causes millions in losses to the budget;
- poses a danger to consumers;
- hits legal businesses;
- allows organizers to evade taxes.
In addition, counterfeit products are often manufactured without quality control and can pose a serious threat to human health.
Note! The story of clandestine alcohol production in Kyiv and Chernihiv region has once again shown the scale of the shadow market for excisable products in Ukraine. Despite regular exposures, the illegal business continues to operate due to high profits and demand for cheap alcohol.
How much money does the budget lose due to illegal alcohol?
The situation in the alcohol market is not any better. According to data for 11 months of last year, budget revenues from producers of alcoholic beverages remained low, despite the increase in excise taxes. This was previously reported by the head of the Verkhovna Rada Tax Committee, Danylo Hetmantsev.
By the way, at the end of February this year, law enforcement officers uncovered a large-scale illegal production of alcohol. According to the Bureau of Economic Security, an organized group was producing products without licenses and excise stamps. During the searches, about 50 tons of alcohol and another 3 tons of finished alcohol were seized.
Expert Zoryana Stetsyuk, in a commentary for Channel 24 , stated that the state loses up to 30 billion hryvnias every year due to the illegal tobacco market alone. The budget is short by another billion hryvnias due to illegal alcohol.
Zoryana Stetsyuk,
Deputy Minister of Digital Transformation
These are large amounts of money that should be used for the state, not for the illegal sector.
According to Stetsyuk, the CASE Ukraine study shows that the budget lost 11.84 billion hryvnias in 2022 due to the shadow alcohol market alone. At the same time, the level of shadow alcohol consumption is estimated at 34–36%.
How should eExcise change the situation?
The full launch of the eExcise system is scheduled for November 1 this year. At the same time, the launch will take place in stages: currently the system is being tested together with businesses, an additional test environment is planned for August, and user registration will open in the fall.
The government expects that e-Excise will help reduce budget losses and make the market more transparent.
We can already see the scale of the problem – over 30 billion hryvnia in losses. Accordingly, the economic effect of e-Excise will be measured by what part of these losses the state will be able to recover thanks to more transparent circulation,
– adds Stetsyuk.
In addition to combating the shadow market, the launch of eExcise is also considered as part of Ukraine's European integration reforms. Each pack of cigarettes or bottle of alcohol will have a unique DataMatrix code, which will allow the movement of goods to be tracked.
According to the government's plan, the system should not only complicate the work of the illegal market, but also simplify the life of legal businesses. This includes reducing paper bureaucracy, automating processes, and providing additional protection for brands from counterfeiting:
- One of the main changes will be the ability for ordinary buyers to independently check the legality of the product through the Diya application.
- To do this, simply scan the code on the packaging.
If there is no information or the data does not match, it will be possible to report this. That is, for the first time, the consumer receives a real control tool simply in his smartphone,
– the official concludes.
Other illegal businesses exposed by BEB
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Law enforcement officers have uncovered a scheme to smuggle alcohol into Ukraine under diplomatic cover worth over 4 million hryvnias. Six suspects were charged, and the court set bail at almost 1 million hryvnias each.
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BEB detectives dismantled the underground production of counterfeit coffee, conducting 22 searches and seizing property worth about 20 million hryvnias. Counterfeit coffee was produced and sold through online stores, messengers, and coffee shops, using fictitious business activities.