Ukraine recognizes Philip Morris and Japan Tobacco International as sponsors of war

The National Agency on Corruption Prevention included two of the world's leading tobacco companies, Philip Morris International and Japan Tobacco International, in the list of international sponsors of the war.

Companies continue to do business in the Russian Federation and support the economy of the aggressor state by paying significant taxes to its budget.

In Russia, Philip Morris International is represented by two affiliated companies: JSC Philip Morris Izhora factories in the Leningrad Oblast and a branch of JSC Philip Morris Izhora, Philip Morris Izhora Kuban in Krasnodar, as well as the organization Philip Morris Sales and Marketing LLC with branches in roughly 100 Russian cities.

The market share of Philip Morris International brands in Russia was 30.1% in 2019. The company is one of the largest taxpayers to the Russian budget, which then supports the Russian army.

Currently, the total volume of investments of Philip Morris International in the Russian Federation exceeds $2 billion.

NACP notes that, having confidence in Russia's economic potential, the company is implementing a large-scale long-term investment program. Since 2017, more than 14 billion rubles ($148 million) have already been invested in the localization of the production of an innovative product – tobacco sticks for IQOS at the factory in Leningrad Oblast. And the total amount of investments in the factory, which was opened in Leningrad Oblast at the beginning of 2000, exceeds $1.1 billion dollars.

According to the financial statements of the Russian division of Philip Morris, the company's revenue in the first year of the full-scale invasion of the Russian Federation in Ukraine increased by 8% to 140.3 billion rubles ($1.5 billion), and net profit to 48.2 billion rubles ($510 million), which is 45% more than in 2021. Accordingly, income tax was paid to the budget of the aggressor in the amount of more than $136 million dollars.

At the beginning of the full-scale war, Philip Morris announced its intention to sell its Russian business in order to preserve its reputation. However, all "attempts" to sell the Russian business seem to have been unsuccessful, and the corporation still remains one of the largest taxpayers to the Russian budget.

The second company, Japan Tobacco International (JTI), is the undisputed leader of the tobacco market in Russia (market share of about 34.9%). It is one of the largest FMCG companies in the country by sales volume. The company's portfolio on the Russian market includes international brands Winston, LD, Mevius, Camel, Sobranie and Russian brands Donskoy Tabak, Kiss, Play, Peter I, Troika and others.

The company is one of the largest manufacturers of reduced risk products (Ploom tobacco heater and Logic Compact electronic capsule vaporizer). JTI is the largest investor and leading taxpayer in the Russian tobacco industry. Over the past 20 years, JTI's investments in the Russian economy have exceeded $4.6 billion. The company's tax payments in 2020 provided 1.4% of the income of the federal budget of the Russian Federation. The company itself openly stated that the Russian market generated about $2 billion dollars in 2022 for the JTI group, or approximately 11% of its consolidated revenue in 2022.

Although JTI representatives stated that JT Group has suspended new investments and marketing activities in Russia, the company still continues to manufacture and distribute products in the Russian Federation.

On March 9, 2022, Philip Morris International announced the suspension of planned investments in the Russian Federation, including the launch of new products. A few weeks later, Philip Morris reported that they were developing options for an orderly exit from the Russian market. In February 2023, Philip Morris admitted that the company may never leave Russia.