Latvia's Illicit Tobacco Trade Shifts: Belarus Down, Counterfeits Up
Latvia's battle against illicit tobacco trade shows significant shifts. Last year, Belarus overtook Russia as the primary source of contraband cigarettes entering by rail, despite reduced volumes due to sanctions and border security enhancements. The state budget lost over 40 million euros due to unpaid taxes on illegal cigarettes alone.
The trend reveals a substantial decrease in illegal cigarettes from Belarus, dropping to 9.8% last year from 67.2% three years ago. However, the production of counterfeit cigarettes and smuggling of electronic cigarette components present new challenges, particularly in the Latgale region. Locally, illegal operators are counterfeiting cigarette brands, with a significant amount produced there.
Counterfeit cigarettes accounted for 40% of all illegally consumed cigarettes last year. Over 23 million illegal cigarettes were seized, with the majority coming from the Belarus and Russia borders. The illicit trade also affects smokeless alternatives like heated tobacco and electronic cigarettes, primarily sold online. Electronic cigarettes and nicotine pads are mainly imported from China, with significant restrictions planned from January 1, 2023.
The decrease in illegal cigarettes from Belarus is a positive development, but the emergence of local counterfeit production and smuggling of electronic cigarette components pose new threats. The Latvian authorities continue to seize millions of illegal cigarettes annually, with the state budget bearing a significant loss due to unpaid taxes. As the illicit trade evolves, so must the strategies to combat it.
