Analytics, Estonia, Markets and Companies, Taxation

Of all the cigarettes consumed in Estonia, 14.1% had been brought into the country illegally or bore the tax stamps of another country, which is 0.8 %age points more than in the final quarter of 2017. The overwhelming majority of the cigarettes sold in boxes bearing foreign tax stamps -- 27.3% -- originated in Belarus. Russia was in second place with 21.4% and Latvia third with 11.6%, the Estonian tobacco industry body said.

Where earlier the largest percdentages of cigarette packs with foreign tax stamps were found in East-Viru county, the overall numbers of finds there have declined somewhat. At the same time, as a result of intensifying cross-border trade, increasing numbers of such packs have been registered in cities of South Estonia.

The ratios of cigarettes sold in boxes with foreign tax stamps were highest in Valga on the Estonian-Latvian border at 48% and in Viljandi, also in South Estonia, at 37%. Next came Kuressaare, capital of Saaremaa, with 33%, the northeastern county town Johvi with 30 %, Voru in Estonia's southeastern corner with 29% and Sillamae in the northeast with 26%.

In Valga the ratio of cigarettes sold in boxes bearing foreign tax stamps grew from 13% to 48% during the year, a bigger increase than anywhere else in Estonia. Significant increases were registered also in Viljandi and Kuressaare. The numbers of finds in Maardu, Narva, Haapsalu and Parnu more than halved.

"We are pleased to see that the situation on the eastern border has improved, in which good work of the Tax and Customs Board definitely plays a role. This beautiful trend is overshadowed by a rapid increase in cross-border trade, which is a result of significant differences in excise duty rates with several neighboring countries. All signs indicate that because of the price difference cross-border trade is not about to subside anytime soon and will go on reducing the tax income of the state," said the chairman of the association, Taavi Salumets.  

Brands which are not officially sold in Estonia made up 5.8% of the cigarette packs collected. The manufacturers whose output is represented the most among the packs of cigarettes bearing foreign tax stamps are Grodno Tobacco Factory with 3.7% and Karelia Tobacco with 0.9%.

Counterfeited produce mades up 0.6% of illicit cigarettes in the second quarter, a ratio 0.1 percentage point higher than in the previous such survey in fall 2017.

The twice-yearly survey is conducted by Nielsen by collecting discarded empty cigarette packs from the streets and public waste bins. The latest study in Estonia was carried out in 14 towns and cities, and 3,300 cigarette packs were collected in its course from April 17 to 24. The number of cigarette packs collected is proportionate to the number of residents of the city and the country's population size.

The four biggest tobacco producers -- British American Tobacco, Imperial Tobacco Limited, Japan Tobaco International, and Philip Morris International -- took part in financing the survey.