Almost a fifth, i.e. 17.7% of cigarettes consumed in the country last year were tax-free, and Lithuania was significantly ahead of Latvia (14%) and Estonia (7%) in the relative size of the shadow market. According to this indicator, Lithuania is the second country in the European Union and is only behind Greece, where counterfeit and smuggled cigarettes in 2019 accounted for 22% of all tobacco products consumed in the country.
According to the research of empty cigarette packets conducted by the global network of professional services companies KPMG, although the total amount of cigarettes smoked in Lithuania shrank slightly last year, as many as 540 million illegal cigarettes were consumed – 200 thousand more than in 2018. It is estimated that the country’s budget has lost up to EUR 68 million in potential revenue due to the shadow cigarette market, 2 million more than in 2018.
According to the research, the share of the shadow tobacco market in Estonia shrank by 2.1 percentage points last year, and in Latvia by as much as 5.4 percentage points.
About 80% of tobacco products imported to Lithuania last year came from neighbouring Belarus. By estimating that up to 40 cigarettes per person are allowed to be brought into the country, researchers estimate that the majority of this flow consists of illegal products. Most of them are consumed in Panevėžys county.
Compared to 2018, the overall use of illicit tobacco in the EU countries, the United Kingdom, Norway and Switzerland, fell by 11% last year. However, in 2019, a total of almost 38.9 billion units of smuggled cigarettes were sold in Europe. This represents 7.9% of cigarettes smoked in the whole Community. According to researchers, state budgets have lost about EUR 9.5 billion in revenue as a result.
According to the research, cigarettes with an unspecified country of origin, as well as counterfeit tobacco products, account for the largest share of illicit tobacco products in the EU. They accounted for more than half of the illicit tobacco consumed in the EU last year. This type of trend was observed for the first time since 2006, when this research was launched.
Compared to 2018, the largest jump in counterfeit tobacco use was recorded in the United Kingdom (137%) and France (82% more than in 2018). The largest flows of smuggled cigarettes reach EU countries from Ukraine and Belarus.
KPMG conducted an annual research to evaluate the illicit trade of cigarettes in 2019 on behalf of Philip Morris International. Experts assess the situation in 28 EU countries as well as Norway and Switzerland through empty packages and legal local sale research.
All research data and methodology are provided here.
