Cigarettes contraband levels in Latvia remain the highest among EU member states
Latvia remains the unfortunate leader among EU member states in terms of cigarette contraband – 21.1% of the total amount, according to data from a survey performed by KPMG last year.
«With that, Latvia’s annual losses from unpaid taxes because of cigarette contraband reach approximately EUR 59 million. Although cigarette contraband volumes have declined 1.5% compared to 2016, Latvia remains the only country in the European Union with cigarette contraband exceeding 20% of total volume of cigarettes consumed in the country. Illegal cigarette trade volumes in Estonia and Lithuania were 11.3% and 17.8% respectively last year,» KPMG Latvia representatives say.
Cigarette consumption in Latvia was 2.28 billion units last year, which is 6.6% less when compared to 2016. The volume of contraband and counterfeit cigarettes in Latvia accounts for 21.1% of the entire consumption volume in the country, reaching 0.48 billion cigarettes in actual numbers. 71.3% of this volume can be called ‘white contraband’, 7.7% fall under the category counterfeit cigarettes, and 21% – other types of contraband products.
Belarus and Russia remain the lead when it comes to carrying contraband cigarettes to Latvia. 343 million cigarettes or 66.7% of contraband was carried to Latvia from Belarus in 2017. 51 million or 10% of contraband cigarettes were brought to Latvia from Russia. According to results of KPMG study, 37 million of all cigarettes consumed in Latvia in 2017 were counterfeit cigarettes. Contraband flow is the main reason for considerable cigarette price differences. For example, the average price of a cigarette pack in Latvia was EUR 3.03 in January, whereas in Belarus the price of a single pack is only 43 cents. In Russia the average price is roughly EUR 1.39.
Study representatives say that legally and illegally Latvia has exported 123 million cigarettes to EU member states. Cigarettes are mainly exported to Estonia (29 million units), Sweden (17 million units), Finland (17 million units), Germany (16 million units), and Britain (15 million units). It should be said that the average price of a cigarette pack in was EUR 3.24 in Estonia, EUR 6.12 in Finland, EUR 6.000 in Sweden, and EUR 8.83 in Britain.
A decline for cigarette consumption has been observed in Europe (including Switzerland and Norway). Compared to 2016, total consumption there declined by 3% last year. There was also a 7.4% decline for consumption of contraband cigarettes. The proportion of contraband cigarettes on the market in Europe exceeded 8.7% (44.7 billion units) last year, according to study representatives.