Cyprus bucks European trend of increasing illicit cigarette consumption

CYPRUS has bucked a Europe-wide trend of increased consumption of illicit cigarettes, according to the latest annual study into the matter by the audit and tax service company KPMG.

In their annual report into illicit cigarette consumption in European countries, the company found that consumption of illicit cigarettes on the continent rose by 8.2 per cent in 2022 compared to the previous year, with a total of 35.8 billion illicit cigarettes smoked.

However, despite rising consumption on the continent, the percentage of cigarettes in Cyprus which are illicit fell to 12.8 per cent in 2022 – 1.6 per cent less than the previous year. Cigarette inflows to Cyprus, both legal and illegal, dropped by 12 per cent.

The Paphos district had the highest proportion of counterfeit and contraband cigarettes on the island, with the Limassol district in second place. The Nicosia district had the lowest proportion.

The north was the largest place of origin for both “non-domestic legal” and illicit inflows of cigarettes into government-controlled areas, while Greece is the second-largest provider of illicit cigarettes in Cyprus. Two thirds of cigarettes departing Cyprus ended up in the United Kingdom.

Despite the decrease in illicit cigarette consumption, it still cost the government a total of €20 million in lost tax revenue. However, this figure was €4 million less than in 2021.

Cypriots are also smoking fewer cigarettes in general, with a 10 per cent decrease in cigarettes smoked in Cyprus in 2022 compared to 2021.

Despite the improving picture in Cyprus, KPMG’s report warned of a “growing pipeline of counterfeit cigarettes” across the rest of Europe. The 35.8 billion illicit cigarettes consumed in the EU in 2022 cost governments in the bloc a total of €11.3 billion in taxes.

Within the 27 EU member states there was a 6.2 per cent rise in the number of counterfeit cigarettes consumed in 2022, with 61.5 per cent of those being consumed in France. The country accounts for 47 per cent of total consumption in the EU, costing the country a whopping €7,225 million in tax revenue.

Ukraine, included in the study for the first time this year, is Europe’s second-largest illicit cigarette market, with 7.4 billion consumed last year. The United Kingdom is the third largest illicit cigarette market on the continent, with Brits having consumed 5.9 in 2022.

The report states that organised criminal networks are now leading cigarette markets across Europe, establishing clandestine production facilities within EU member states. Last year, 134 illicit cigarette manufacturing sites in 18 different European countries were raided by police as governments attempted to crack down on what appears to be a growing problem.

Cyprus Mail contacted the customs and excise department for comment.