Ukraine's Verkhovna Rada passes bill banning cigarettes, alcohol from duty-free stores

MOSCOW. Aug 10 (Interfax) - Ukraine's Verkhovna Rada has passed in the second reading a bill banning the sale of cigarettes and alcohol in duty-free shops.

The bill was supported by 276 deputies at a plenary session on Thursday, Ukrainian media reported citing deputy Yaroslav Zheleznyak.

"The bill banning the scheme for cigarettes and alcohol in the duty-free zone has been passed! This is a surplus of 5 to 7 billion a year in the budget," he said on social media, noting that the document was not supported by the European Solidarity and Batkivshchina factions.

The bill provides for amendments to the Ukrainian Customs Code and other laws countering the illicit trafficking of tobacco products, head of the parliamentary Tax and Customs Policy Committee Daniil Getmantsev said.

"The bill is designed to eliminate the scheme of dodging VAT and excise taxes under the guise of carrying out operations on the sale of tobacco products by duty-free stores," he said on social media.

In May 2023, the Verkhovna Rada's temporary investigative commission dealing with the illegal turnover of tobacco products uncovered a duty-free scheme. In 2021, there were 48 duty-free stores, but there were 15 left after the crisis broke out. Although foreign travel is restricted for a large number of citizens, 20 million packs of cigarettes were sold in 2022, and 27 million packs a year earlier.

During the investigation, the temporary investigative commission found out that an average of 30-35 packs of cigarettes are bought per bill at the ground checkpoints, and five to seven packs are purchased at other checkpoints, while the allowed amount is two packs per person. The number of cigarettes produced for the duty-free stores and sold there also differs by hundreds of thousands of packs.

Getmantsev estimates the monthly loss of revenue to the state budget from the three excisable goods at $1 billion.