Irish Tax Authority Reports Record High in Illegal Tobacco

Aug.08.2024
Irish Tax Authority Reports Record High in Illegal Tobacco
Ireland faces record levels of illicit cigarettes, with one in five packs smuggled into the country, according to Revenue study.

According to a report by the Irish Mirror on August 8th, a recent study by the Irish Revenue revealed that the quantity of illegally smuggled cigarettes in Ireland reached the highest level in a decade last year, with nearly one-fifth of cigarette packs entering the country through smuggling.


The latest annual investigation commissioned by the tax authorities in Ireland assessed the scale of illegal tobacco products sold in the country. It found that 19% of cigarette packs were classified as illegal last year, an increase from 17% the previous year.


The tax authority estimates that the consumption of 32.9 million illegal cigarette packs last year resulted in a potential loss of around 4.22 billion euros to the national treasury, an increase of 38 million euros from the 2022 estimate.


However, the investigation found that none of the illegally packaged cigarette packs detected last year were counterfeit cigarettes. The percentage of counterfeit tobacco products reached a peak of 7% in 2021.


A study has shown that in 2023, 99% of the analyzed illegal cigarette packs were classified as "smuggled goods", meaning they were ordinary commercial brand cigarettes purchased legally in another country and then smuggled into Ireland without paying taxes. The remaining 1% of illegal cigarette packs were classified as "counterfeit cigarettes", which are manufactured to be sold illegally in another market.


The quantity of cigarettes brought into the country by individual smokers from overseas last year also hit a record high. A survey found that 15% of cigarette packs were legal but not taxed in Ireland, indicating they were purchased legally in other jurisdictions and brought into Ireland by smokers.


In the past decade, this proportion has mostly been below 10%.


The tax office stated that "The results from 2023 indicate that the prevalence of illicit and legal non-duty paid cigarette packs has increased in recent years in Ireland.


Furthermore, last year it was found that 20% of the analyzed rolled tobacco products were classified as illegal, while an additional 12% were legal but had not paid Irish taxes. In 2023, tax officials in their efforts to combat illegal trade seized 6837 individual cases, amounting to a total value of 63.4 million euros in tobacco products.


The seized items included 69.5 million illegal cigarettes valued at 55.7 million euros, as well as 10191 kilograms of tobacco valued at 7.7 million euros.


The tax office stated that


We are targeting various stages of the illegal tobacco trade supply chain, identifying and cracking down on smuggling, production, distribution, and sales of such products in order to achieve our seizure targets, and prosecute those responsible when possible.


The tax office stated that many criminal activities surrounding illegal tobacco trade have transnational and cross-border dimensions, so their officials are collaborating with the European Anti-Fraud Office (OLAF), Europol, the World Customs Organization (WCO), and the Irish police force (An Garda Síochána).


Finance Minister Michael McGrath stated last year that the government has ensured that the tax authorities have the legal powers necessary to combat illegal tobacco trade through various Finance Acts over the years. The total excise tax revenue from tobacco products sold in Ireland last year was 8.379 billion euros, a decrease of 16% or 1.55 billion euros from the previous year.


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