Ban on selling cigarettes, alcohol in Ukrainian duty-free shops to take effect on Sept 1

MOSCOW. Aug 31 (Interfax) - Ukrainian President Vladimir Zelensky has signed into law a bill restricting duty-free sale of cigarettes and alcohol, Ukrainian media said with the reference to parliament deputy Yaroslav Zheleznyak.

"Say goodbye to the scheme! The president has signed into law a bill drafted by me and the colleagues to restrict duty-free sale of cigarettes and alcohol," Ukrainian media quoted Zheleznyak as saying on a social network.

The law, which takes effect on September 1, 2023, prohibits goods that fall under the 2401-2404 category of the Ukrainian Classification of Commodities from being registered as duty-free commodities and sold duty-free until the termination or cancellation of martial law in Ukraine.

An ad hoc commission of the Verkhovna Rada investigating illegal tobacco trade detected the duty-free scheme in May 2023. It was noted that the number of duty-free stores dropped from 48 in 2021 to 15 after the beginning of the crisis. Although most citizens were not allowed traveling abroad, 20 million packs of cigarettes were sold in 2022, versus 27 million a year ago.

The commission found out that 30-35 packs of cigarettes are bought per person on the average at ground border checkpoints, versus five to seven packs purchased at the others, and only two packs of cigarettes are allowed to be bought per person while crossing the border. The numbers of made and sold duty-free cigarettes differ by hundreds of thousands of packs.

Daniil Getmantsev, head of the Parliament Committee on Finance, Tax and Customs Policy, estimated the monthly losses of the national budget from three excisable goods at $1 billion.

The ad hoc investigative commission recommended the State Tax Service in May 2023, while discussing the situation on the market of excisable goods, that tobacco manufacturers and exporters be inspected for due production and distribution of tobacco raw materials.

It also recommended that the Economic Security Bureau and the National Police take measures to detect and stop the operation of illegal manufacturers of spirit and alcohol.

The ad hoc investigative commission and the National Police agreed in June to enforce personal responsibility of heads of regional police departments for illegal sale of cigarettes.