--- title: "Ukraine to Lose at Least UAH 18.3 Billion in Taxes Due to Illegal Vape Market — Study" description: "According to the Growford Institute, Ukraine's budget will lose at least UAH 18.3 billion in taxes in 2026 due to the illegal e-cigarette market, with 96% operating in the shadows." date: 2026-11-10T08:20:26.615Z lang: en url: https://xab.info/en/posts/ukraine-to-lose-18-3-billion-due-to-illegal-vape-market tags: [ukraine, e-cigarettes, vapes, tax-evasion, excise-tax, growford-institute, illegal-trade] author: "Darya Fomina" publisher: "XAB.info" --- # Ukraine to Lose at Least UAH 18.3 Billion in Taxes Due to Illegal Vape Market — Study ![Person in a turquoise sweater holding various colorful electronic cigarettes and vapes in their hands](https://xab.info/media/2026/11/10/ukraina-nedopoluchit-18-3-mlrd-grn-nalogov-iz-za-nelegalnogo-rynka-veipov/ukraina-nedopoluchit-18-3-mlrd-grn-nalogov-iz-za-nelegalnogo-rynka-veipov-1.webp) ## Key Points - In 2026, Ukraine's budget may lose at least UAH 18.3 billion due to the illegal vape market; losses could grow to UAH 30 billion by 2028 - About 96% of the e-cigarette market in Ukraine is in the shadows; 50% of the liquid market comes from self-mixing kits - The current fine of UAH 25,000 does not deter illegal trade; the Growford Institute proposes raising it to UAH 250,000 - Analysts recommend banning the sale of self-mixing components at vape retail points and cracking down on business fragmentation schemes According to a study by the Growford Institute, Ukraine's state budget could lose at least 18.3 billion hryvnias in excise tax in 2026 due to the illegal electronic cigarette market. Analysts warn that about 96% of the vape market operates in the shadow economy, and current penalty mechanisms are unable to stop illegal trade. RBC-Ukraine reports this citing data from the institute. ### Scale of Losses: From UAH 18.3 Billion in 2026 to UAH 30 Billion in 2028 Growford Institute experts forecast a steady increase in budget losses: while the shortfall will be at least UAH 18.3 billion in 2026, this figure could rise to UAH 23.5 billion in 2027 and approach the UAH 30 billion mark by 2028. To illustrate, analysts compare excise revenues: in 2025, the budget received about UAH 122 billion in excise tax from the sale of conventional tobacco cigarettes, whereas the state received only about UAH 0.5 billion from the sale of electronic cigarettes. A gap of more than 200 times indicates that the vast majority of vape turnover bypasses the treasury. ### The "Self-Mixing" Scheme: How Excise Tax is Evaded Analysts call the sale of so-called "self-mixing" kits — sets of components from which the buyer independently prepares e-liquid — one of the most common tax evasion schemes. According to the Growford Institute, such kits currently account for about 50% of the Ukrainian vape liquid market. The tax-saving mechanism works as follows: for 30 ml of finished liquid, the state should receive about UAH 450 in excise tax, but when selling a self-mixing kit, the budget receives at most the excise tax from a 3 ml nicotine booster (10% of the finished liquid), i.e., only UAH 45. Thus, the tax burden is reduced tenfold. ### Why Fines Do Not Work The current minimum fine for the retail sale and gratuitous distribution of nicotine and liquid components is UAH 25,000. Analysts believe this amount does not have a sufficient deterrent effect because illegal trade remains highly profitable. According to the institute's estimates, a single vape retail outlet in a shopping mall can generate from UAH 10,000 to UAH 15,000 in revenue per day. As a result, after raids and product seizures, sellers generally suspend operations for only a few days or reduce their assortment before resuming activities. ### Growford Institute Recommendations To combat the illegal market, analysts propose a comprehensive set of measures. First and foremost is raising the minimum fine for the retail sale and gratuitous distribution of nicotine and liquid components to UAH 250,000, a tenfold increase. It is also proposed to legally ban the retail sale and gratuitous distribution of propylene glycol, food flavorings, and glycerin — the main components for "self-mixing" — at electronic cigarette sales points. Separately, experts recommend tracking and stopping business fragmentation schemes, where several individual entrepreneurs operate at a single retail point, registering the sale of different kit components among themselves. Furthermore, the Growford Institute considers it appropriate to ban the issuance of retail licenses for excise goods to enterprises previously deprived of such licenses, as well as to persons associated with offenders, and to provide liability for landlords who continue to rent space to violators. ### Coordination and Supply Chain Control Additional recommendations include strengthening the coordination of law enforcement and regulatory bodies in combating the illegal trade in electronic cigarettes. Analysts suggest regularly inspecting vape retail networks and tracking the supply chains of raw materials and equipment for liquid production. Experts believe it is advisable to involve local self-government bodies and postal operators, through which illegal products are often delivered, in such work. The combination of proposed measures, according to the Growford Institute, can significantly increase the effectiveness of tax authorities and reduce the scale of the shadow economy in the electronic cigarette segment. ## Fact-Check & Sources - [Украина потеряет 18 млрд грн из-за нелегальных вейпов, - исследование](https://www.rbc.ua/ukr/news/ukrayina-vtratit-18-mlrd-grn-cherez-nelegalni-1794298020.html) - Primary source: text of the Growford Institute study published by RBC-Ukraine. All figures (UAH 18.3 billion, 96% shadow market, UAH 450 vs UAH 45 excise, UAH 25k/250k fines, UAH 10-15k daily revenue) match the basis of the article. ## FAQ ### How much does Ukraine lose due to the illegal vape market in 2026? According to the Growford Institute, state budget losses in 2026 will be at least UAH 18.3 billion. In 2027, the amount could rise to UAH 23.5 billion, and in 2028 to approximately UAH 30 billion. ### What are "self-mixing" kits and why do they allow tax evasion? These are component sets from which the buyer prepares e-liquid themselves. Instead of paying excise tax on the entire volume of finished liquid (about UAH 450 for 30 ml), tax is paid only on a 3 ml nicotine booster (about UAH 45), reducing the tax burden tenfold. ### What fine is proposed for the illegal sale of vape components? The Growford Institute proposes raising the minimum fine from the current UAH 25,000 to UAH 250,000, as the current amount does not provide a sufficient deterrent effect. ### What share of the e-liquid market belongs to self-mixing kits? According to Growford Institute analysts, self-mixing kits account for about 50% of the Ukrainian e-liquid market.