The Bureau of Economic Security of Ukraine (BEB) has halted the activities of an organized group involved in the illegal production and sale of liquids for electronic cigarettes. Law enforcement seized assets and products worth approximately 30 million hryvnias.
This is reported by Finway
Sales Scheme and Scale of the Operation
According to the investigation, since 2023, a wide network of vape shops has been operating in Kyiv and the Kyiv region, through which so-called “self-mixes” — liquids for electronic cigarettes produced without state control — were sold. At the same time, the products were actively sold through online stores, organizing delivery across Ukraine. Investigators recorded the functioning of underground production and the sale of illegal excise products, including 43,487 flavorings, 30,243 units of glycerin, 36,044 flavor and strength enhancers, 19,781 cartridges, 3,590 pod systems, 27 sets of equipment, and ingredients for making liquids — propylene glycol, glycerin, flavorings, and other components.
Tax Evasion and Income Legalization
Participants in the illegal business avoided paying taxes in particularly large amounts by using a “fragmentation” scheme between controlled individual entrepreneurs and limited liability companies. Although the network functioned as a single enterprise, it was formally divided into several structures to minimize the tax burden. Funds from illegal activities were legalized through financial transactions: they were transferred between accounts and declared as income from supposedly legal activities, which allowed concealing their origin and spending them on the acquisition of movable property.
Thanks to the timely detection and cessation of the illegal network’s operations, significant losses to the state budget were prevented. According to experts, if the seized products had been sold to end consumers, it could have resulted in tax evasion of approximately 20 million hryvnias.
“As part of the special operation, over 70 simultaneous searches were conducted in Kyiv, as well as in the territories of Kyiv, Kirovohrad, Poltava, Cherkasy, and Chernihiv regions. Investigative actions took place at the residences of the organizers, at production sites, and at points of sale of finished products,” he noted.
According to the Attorney General Ruslan Kravchenko, the operation of the illegal business was supported by more than 200 individuals. The total value of the seized assets amounts to about 30 million hryvnias, these assets will be arrested, and the illegal kiosks through which the products were sold have already been dismantled. Additionally, over 70 thousand US dollars, computer equipment, and rough reports related to the activities of the scheme participants were seized.
At the same time, it is noted that the current anti-tobacco legislation in Ukraine does not account for the emergence of new tobacco products, particularly electronic cigarettes, and requires updating for effective combat against such offenses.