The electronic cigarette market in Ukraine primarily operates in the shadows, leading to annual losses for the state budget amounting to 5 billion hryvnias. This situation has arisen because most sales occur outside the legal framework.
This is reported by Finway
Tax Evasion Mechanisms
In Ukraine, electronic cigarettes are sold through two main channels: retail networks, where illegal tobacco is often found, and online platforms, where products are offered without excise stamps. A well-known tax evasion scheme involves selling individual components for DIY mixtures—propylene glycol, glycerin, and nicotine, which, according to the rules, are “given” to the buyer. This practice allows sellers to evade tax payments amounting to billions of hryvnias each year. In addition, ready-made products are actively sold online and distributed through illegal sales points.
Combating the Underground Market and Its Results
Law enforcement agencies are fighting against the shadow market of electronic cigarettes. Recently, 11 illegal sales points were closed in Kyiv. Illegal production facilities have been dismantled in the Kharkiv and Lviv regions, and products worth 1.2 billion hryvnias have been seized. A significant batch of electronic cigarettes was also confiscated at the Lviv customs.
“A common tax evasion scheme is ‘self-mixing’: propylene glycol, glycerin, and ‘gifted’ nicotine are sold separately, allowing the buyer to mix the final product themselves. This enables evasion of about 5 billion hryvnias in taxes annually. Ready-made products are also sold through the internet and illegal points,” said a member of parliament.
Despite these efforts, some illegal points and production facilities continue to operate openly. Therefore, it is expected that law enforcement, including the Bureau of Economic Security, will intensify the fight against the shadow market. A large-scale campaign to eliminate illegal production and distribution channels and hold those responsible accountable is a priority.