Top Takeaways:
- CEO says flavored vape ban has driven rapid growth of illicit trade.
- State losses are estimated at UAH 35 billion in cigarette and vape taxes.
- Ban on flavored e-liquids took effect July 2023 under Law No. 1978-IX.
Ukraine’s ban on flavored e-liquids has triggered a surge in the illegal vape market, according to Philip Morris Ukraine CEO Maksym Barabash, who warned that unregulated sales are undermining both public health and state revenues.
“This started happening after the state banned e-cigarette liquids,” Barabash told Interfax-Ukraine at the Kyiv International Economic Forum 2025. “According to the law, flavored vapes cannot be sold. These products have not only gone into the shadow market, but they have also stopped paying taxes.”
He explained that without tax obligations, illegal vapes are sold at much lower prices, making them more appealing to consumers and pushing out legitimate companies. Barabash added that “not all law enforcement and government agencies are aware of the scale of what’s happening in the market.”
Philip Morris Ukraine estimates the shadow cigarette market has already deprived the state of UAH 30 billion in tax revenue, with another UAH 5 billion lost to the illicit vape trade.
The current restrictions stem from Law No. 1978-IX, which came into effect on July 11, 2023, banning the production, import, and sale of flavored liquids for electronic cigarettes.
Barabash’s comments reflect increasing worries from industry and policymakers that too many restrictions might drive more nicotine products underground, where quality, safety, and tax compliance are harder to oversee.
Analysts observe that Ukraine’s illegal tobacco trade was already among the largest in Europe before the vape restrictions. With enforcement difficulties and high consumer demand for flavored products, the country’s gray market for nicotine products is expected to continue growing through 2026 unless new policy changes are implemented.
