Romanian Financial Guard Estimates Tax Evasion In Cigarette Sales At EUR1B

„Tax evasion is estimated at EUR1 billion for cigarettes. There are three sources: border traffic with Ukraine and the Republic of Moldova, where excises are lower, and sales in duty-free shops. Duty-frees sell so much that you’d think each travelling person buys 50 packs of cigarettes,” Ladanyi told MEDIAFAX.

He said the Financial Guard is always on the lookout for illegal cigarette deposits and even illegal cigarette factories, although no such unit has been found since 2007.

„If we can’t stop border traffic or find warehouses, then we’ll be sure to often check salesmen and people selling cigarettes in marketplaces,” he said, adding the era of cigarette smuggled in Romania in freight trucks seems to have set. „Now they bring them in small cars, but probably a lot more often, because smuggling has increased,” he said.

The Financial Guard’s estimates are similar to those put forth in a survey by Novel Research, released recently, which said smuggled cigarettes have come to account for 36% of the total Romanian cigarette market in the first two months of the year, from 22% in the last quarter of 2009.

Cigarette producers said at that time the government would lose an estimated EUR1 billion in taxes and excises because of contraband cigarettes, as they expect smuggled products to reach 50% of the total market by the end of the year.

The survey showed most contraband cigarettes sold in Romania come from the Republic of Moldova (32%), duty-free shops (27.4%) and countries such as Ukraine, Russia or Serbia.

On the Romanian market, a pack of legally sold cigarettes costs between RON8.3 and RON10.9, while a pack of contraband cigarettes costs RON4.5 to RON8.

The Romanian Government has banned the sale of tobacco and alcoholic drinks in duty free shops starting April this year, but cigarette producers said they doubt the move will hinder contraband in any way.

Also, the order banning the sale of tobacco in duty-free shops has been suspended recently by a court. The ruling is not irrevocable, but executory, and the Finance Ministry may file an appeal with the High Court of Justice.