Rada restricts sale of duty-free cigarettes, alcohol during martial law

The Ukrainian parliament approved a bill on Thursday that imposes a temporary ban on the sale of domestic cigarettes in duty-free shops, along with placing limits on the sale of other tobacco and alcohol products. 276 MPs voted in favor of the measure, according to Yaroslav Zheleznyak of the Golos party who authored the draft law.

The bill contains two key proposals:

- It prohibits placing and selling tobacco products made in Ukraine in duty-free shops during martial law. Shops have one month to report cigarette stock levels or risk losing their license.

- During martial law, the bill limits duty-free sales to no more than two packs of cigarettes and one liter of hard alcohol per person per day, provided a passport is shown. It sets a two-liter limit for alcohol up to 22% alcohol content. Fines of 800 to 1,000 minimum incomes (13,600 to 17,000 UAH or $368-460) are introduced for exceeding these limits.

In addition, the law prohibits the import of cigarettes, cigars, and tobacco from Belarus during martial law.

The law enters into force the following month after its publication.

It was developed with the aim of destroying the VAT and excise tax evasion scheme under the guise of carrying out transactions for the sale of tobacco products by duty-free shops.

The temporary investigative commission of the Verkhovna Rada previously established that in 2022, 15 duty-free shops allegedly sold 20 million packs of cigarettes. In fact, many cigarettes do not reach duty-free shops, they are sold on the black market without paying the necessary taxes.

Previously, Zheleznyak said that banning the sale of Ukrainian cigarettes in duty-free zones is not a very elegant solution, but "the only effective one in this situation."

In early April, the Cabinet of Ministers increased the price of excise stamps for the first time since 2014. They went up in price by 80%.