7 years for smuggling liquids for vapes

#industry news

In Russia, they propose to punish with imprisonment for up to seven years for smuggling liquids for electronic cigarettes. The Federation Council Committee on Economic Policy came up with such an initiative. The senators' letter to the assistant to the President of the Russian Federation Maxim Oreshkin is at the disposal of Izvestia. In 2024, cigarettes and alcohol will already be included in the list of strategic goods — largely to combat smuggling from the EAEU countries. Last year, experts estimated the illegal market share of vaping liquids at 93%.

Why toughen penalties for smuggling vaping liquids

The Federation Council Committee on Economic Policy proposes to combat the smuggling of vaping liquid by including it in the list of strategically important goods. In this case, illegal crossing of the border of the Russian Federation with such liquids will face a penalty of imprisonment from three to seven years. Izvestia has a copy of the letter with such a proposal sent to the assistant to the President of the Russian Federation Maxim Oreshkin.

In addition to the prison term, the article of the Criminal Code of the Russian Federation for smuggling strategically important goods involves a fine of up to 1 million rubles. Today, there is no criminal liability for illegal movement of vapes and liquids for them, explains Dmitry Gorbunov, partner of the law firm "Rustam Kurmaev and Partners".

— Currently, it is only possible to bring to administrative responsibility for such an offense. Commodity smuggling was decriminalized back in 2010, and for this reason there was only administrative responsibility under the Administrative Code of the Russian Federation," the lawyer noted.

Andrei Kutepov, the head of the Federation Council Committee on Economic Policy, also draws attention to this: all goods illegally imported from the EAEU are not considered contraband and do not fall under the relevant articles of the Criminal Code of the Russian Federation. For example, the article of the Criminal Code on the smuggling of alcohol and tobacco refers to the illegal movement of products across the customs border, and there is no such border between the EAEU member states. Largely for this reason, it was decided to include cigarettes and alcohol in the list of strategically important goods in 2024, since the article for their smuggling also applies to crossing the state border.

Izvestia, citing data from the Ministry of Finance, previously wrote that Russia had a large-scale practice of smuggling alcohol and tobacco products from the EAEU countries, which became possible thanks to the very loophole in the Criminal Code, that is, smugglers legally imported goods into Russia under the guise of transit to other countries of the Customs Union, but actually unloaded its within the Russian Federation.

According to the results of 2022, budget losses due to illegal cigarette trafficking amounted to more than 80 billion rubles, and the minimum shortage for the first half of 2023 is estimated at 46.5 billion, the Ministry of Industry and Trade said.

By analogy with cigarettes, liquids for electronic means of nicotine delivery should also be included in the list of strategically important goods, Kutepov insists. Apparently, the senators do not focus on the electronic cigarettes themselves in this case, because only liquids are currently subject to excise taxes, that is, the smuggling of such products directly affects budget revenues. The excise tax rate on liquids for electronic nicotine delivery systems in 2024 will be 42 rubles per 1 ml, in 2025 - 44, in 2026 - 46 rubles. The current rate is 20 rubles per 1 ml.

— After raising the excise tax on liquids twice and introducing import licensing from third countries in 2024, the main flow of illegal products will be redirected to the open border of Russia with Kazakhstan and to a lesser extent with Belarus, — the senator is sure.

The volume of the shadow market of vapes and liquids

was asked by Izvestia to evaluate the proposal of the senators of the Union of Enterprises of Nicotine-containing Products, the association "Nicotine Alliance", "Support of Russia" and the Discovery Research Group agency, which conducted a study of the electronic cigarette market. No prompt responses were received.

The share of illicit trafficking in electronic cigarettes and nicotine-containing liquids in 2022 amounted to 79% of the total market volume of such product categories. If we talk separately about liquids, then this share has reached 93% at all, according to the data of the National Scientific Competence Center in the field of combating Illicit Trafficking in Industrial products.

Market participants also agree with such figures. So, currently liquid nicotine is not produced in Russia — it is imported from abroad, mainly from China, India and Poland, explains Andrey Loskutov, head of the All-Russian Public Movement for the Rights of Smokers. Moreover, unscrupulous businessmen import liquid nicotine "under different disguises," including under the guise of household chemicals, in order not to receive the state license necessary for its import and not to pay excise duty, the expert added.

He also estimates the share of the illegal market of nicotine-containing products at more than 90%.

— Illegal is also a problem for honest business: when there is a product on the counter nearby that is imported without paying taxes and which is much cheaper, this is direct competition to honest, legal goods, — Loskutov noted, adding that the senatorial initiative can help restore order in the market of nicotine-containing products.

The market of liquids for vapes and electronic cigarettes themselves is "quite strongly differentiated" by the level and types of products, and is also characterized by a large number of manufacturers, the Federation Council emphasizes. In addition, the vast majority of liquids are imported to Russia today.

— In this regard, the market is difficult to administer from the point of view of levying taxes and customs duties, — Kutepov draws attention.

The committee also claims that vapes serve as a kind of substitute for cigarettes, which in 2024 will be included in the list of strategically important goods.

— They delay some part of consumers of tobacco products and tax deductions from the latter, and therefore should be included in this list by default, — the senator explains.

Izvestia appealed to the Federal Customs Service, the Ministry of Industry and Trade and the Ministry of Internal Affairs of Russia with a request to evaluate the initiative and provide information on the volume of the shadow market of electronic cigarettes and liquids for them. The press service of the Ministry of Industry and Trade "Izvestia" said that the initiative of the Federation Council has not yet been received by them.