філіп морріс україна спонсор війни

On March 18, the government submitted a draft law to the parliament that would make it extremely easy to sell IQOS systems and HEETS sticks for them.

Officials propose to introduce a 20% tax preference for tobacco heating systems (THS) compared to cigarettes and cigarillos. The government proposes to reach an excise rate of 90 euros per 1000 units for cigarettes and cigarillos by 2028, and only 72 euros per 1000 units for HTPs.

“This position reflects the interests of the tobacco company Philip Morris International, which controls 80% of the market for heated cigarettes in Ukraine (used with IQOS devices) and is recognized by the NACP as an international sponsor of the war against Ukraine,” note the experts of the NGO “Life”, which has been working closely with the EU for many years.

It seems that we are dealing with a rather dirty lobbying, which is being carried out by the Ministry of Finance through the Cabinet of Ministers (it was the Ministry’s officials who drafted the bill “On Amendments to the Tax Code of Ukraine on Revision of Excise Tax Rates on Tobacco Products”).


First, the latest memorandum with the IMF instructs to find additional sources of budget revenues, not to open new holes. The Ministry of Finance is one of the signatories to the document, and in the near future it is going to introduce a package of additional taxes to increase support for the Armed Forces. It is strange that at the same time the Ministry of Finance proposes to tax citizens’ cars, but at the same time reduces taxes for a large tobacco company.

Second, the global trend is to reduce the population’s dependence on tobacco products. Best international practices have shown that the most reliable way to do this is to increase excise taxes. IQOS systems are tobacco products that contain nicotine. Reducing the excise tax means lowering the price so that they sell better and more. It also means increasing the profits of the manufacturer, Philip Morris. There is something very wrong with this equation.

Thirdly, the most important dirty thing mentioned in the statement of the NGO “Life” is that the Cabinet of Ministers offers to help the sponsor of the war. The main recipient of the benefits, the tobacco company Philip Morris, is listed by the NACP as a war sponsor. The manufacturer of IQOS systems, as well as Marlboro, Parliament, Bond, Chesterfield, L&M, Next, VEEV, VEEBA cigarettes, continues to operate in Russia and pay billions in taxes. Although he had promised to withdraw from Russia in March of 2012.

Nevertheless, the company wants to receive tax benefits in Ukraine. In my opinion, this case should attract the attention of the NABU, the SBI and the BES, which should strictly prosecute such cases. They resemble classic corruption, with huge losses to the budget.

According to the calculations of experts of the NGO “Life”, the adoption of the tax preference for HETs initiated by the Ministry of Finance of Ukraine will lead to a shortfall of UAH 15 billion in the state budget of Ukraine in 2025-2028. And by 2030, Ukraine’s losses will amount to at least UAH 25.4 billion. “Contrary to the interests of Ukraine, these funds from the pockets of citizens will go to tobacco companies, including international sponsors of the war,” write the experts of the NGO “Life“.


I am not going to discuss whether it was right for Philip Morris to stay in Russia. This is the decision of the company’s owners, and it reflects their life values.

But I am sure of another thing: if a company operates in Russia, it is not entitled to tax benefits in Ukraine. Business can want anything, but the line of behavior of Ukrainian civil servants must be clear.

And, of course, Ukrainian smokers should be reminded every time that IQOS and cigarettes are sold in Russia, and that they are used to finance the war. At the very least, this fact should lead to reputational losses for Philip Morris.

I would add that Philip Morris already has two major preferences that a war sponsor should hardly have.

The first preference is a stake in the cigarette wholesale business. Philip Morris once owned a stake in Tedis, a monopoly in the wholesale of cigarettes in Ukraine (known as Megapolis during Yanukovych’s time). According to the information circulating in the media, PMI and their competitor Japan Tobacco Inc (JTI) each received about 20% of the monopolist’s capital. Perhaps these shares are still there. I have never heard that the company has lost this share.

Interestingly, both companies are on the NACP’s list of war sponsors. However, they probably still receive part of the profits from the sale of cigarettes to Ukrainian citizens.

The second preference is excise tax relief. This is the so-called ad valorem component of the excise tax.

In short, the lion’s share of the price of cigarettes is made up of excise duty, a kind of tax on the bad habit of smoking. In fact, there is not just one excise tax on tobacco – there are three. The first part is called the “specific excise tax,” and it is the standard amount per pack of cigarettes. Currently, it is 37.62 UAH per pack – the same rate for both cheap and expensive cigarettes. The second share is the “ad valorem excise tax”, which is currently paid as 12% of the cost of a pack. The 12% for cheaper cigarettes translates into a smaller amount, and for more expensive cigarettes, a larger amount. And finally, the third is the so-called “Minimum Excise Tax Obligation”. If the amount of “specific + ad valorem” is less than UAH 50.33, it is “brought up to” the minimum possible UAH 50.33. If it’s higher, they forget about it and pay as much as they can.

I’ve given a not entirely scientific approach, but it clearly explains the mechanism. Here are two examples:

The first example. Cheap cigarettes “Prima Lux Blue”:

Price of a pack (20 cigarettes) = 77 UAH


  • specific excise duty = UAH 37.62
  • ad valorem excise tax = 12% of UAH 77 = UAH 9.24

Total specific + ad valorem = 46.86 UAH

This is less than UAH 50.33, so the final excise tax is being “pulled up”

The total excise tax to be paid by the company is UAH 50.33.

The second example. Expensive cigarettes “Parliament Carat Purple”.

Price of a pack (20 cigarettes) = 115 UAH


  • specific excise duty = UAH 37.62
  • ad valorem excise tax = 12% of UAH 115 = UAH 13.8

Total specific + ad valorem = UAH 51.42

This is more than UAH 50.33, so the final excise tax is left as it is.

The total excise tax to be paid by the company is UAH 51.42.

As you can clearly see, the legislation is written in favor of expensive cigarettes (called “premium” cigarettes). The buyer chooses whether to pay UAH 77 for cheap cigarettes that are not as good/tasty as they think they are or to buy better/tastier/stylish cigarettes for UAH 115. And if we consider that both UAH 77 and UAH 115 are already quite a high price for a Ukrainian budget, we get an interesting phenomenon. If a buyer cannot afford to pay high prices, they can either stop smoking or switch to homemade cigarettes. Instead, customers who are able to pay choose “premium” brands.

What does Philip Morris have to do with it? In fact, it (along with JTI and BAT) is a producer of expensive tobacco products. Back in Yanukovych’s time, when RMI acquired a stake in Megapolis (now Tedis), it received a tax break. The ad valorem component of the excise tax on tobacco products was reduced from 25% to 12%. It remains so today. Every attempt to raise the ad valorem rate was met with strong backroom resistance from tobacco companies.

It turns out that manufacturers of expensive cigarette brands have been enjoying preferences for the past 11 years. Is this about corruption? What do you think?

In the vast majority of EU countries, ad valorem rates are much higher, sometimes reaching 50%. In other words, a wealthy smoker who smokes expensive “premium” brands pays much more than a smoker of cheap “social” brands. This is the secret of why cigarettes are so expensive in Europe, and why Europe is increasingly tobacco-free.

Even in Russia, the ad valorem excise rate is 16%.

How much did this “charity” of officials cost the budget? According to some estimates, the shortfall in tobacco excise tax exceeded UAH 100 billion, a huge amount even at the current exchange rate.

If the ad valorem rate were 25%, the excise tax on a pack of Parliament Carat Purple cigarettes would be UAH 66.37 instead of UAH 51.42. Additional budget revenues amounted to 29%, or UAH 14.95. Out of a thousand packs, it’s almost $400. Even if some smokers quit, there will be additional revenues to the budget multiplied by the saved health of people. Win-win for the budget and Ukrainians, but a net loss for Philip Morris. I think this is the answer to why the increase in the ad valorem excise rate on tobacco products is blocked every time.

I don’t know which civil servants are behind this, but there is definitely something unclean here.


It all started well. On March 24, 2022, Philip Morris international (PMI) announced that it was shutting down production in Russia, withdrawing its cigarette brands from sale and canceling investments. This was stated by the company’s CEO Jacek Olczak.

But a year later, the same Olchak said the exact opposite – that PMI could not sell the business for a reasonable price. The company’s shareholders do not agree with this, and he is only fulfilling the will of the shareholders, so Philip Morris international will probably stay in Russia.

As for shareholders, it is mostly a few institutional investors from the United States. Among them: Vanguard Group Inc, Capital World Investors, Blackrock Inc, State Street Corporation, Morgan Stanley, Geode Capital Management LLC, Price (T.Rowe) Associates Inc, JP Morgan Chase & Company. They even have an excuse for their decision. The money of American and British pensioners is invested in PMI stocks, so you can’t risk this money (not quite true).

In fact, the events of the last year indicate that the PMI is not going anywhere. In 2022, Philip Morris was ranked third in terms of annual turnover among all foreign companies remaining in Russia. Sales in 2022 amounted to RUB 392.9 billion (in 2021 – RUB 359.53 billion), with the corresponding payment of taxes.

The financial results for 2023 are not yet available, but there is some data. First, the company’s annual sales increased to RUB 399.9 billion.

Secondly, according to marketing data, Russia is the fourth largest market for Philip Morris International in the world, after Indonesia, Turkey and Japan. The company holds 31.8% of the Russian market. Sales of traditional cigarettes in 2023 in units fell, and this is a global trend. Instead, sales of conditional IQOS increased.

Does the company feel good in general? Yes, definitely. According to other reports, the IQOS business globally is giving the company “excellent results” in Europe, Japan, and emerging markets.

Does RMI finance the aggressor country? Here are some facts. Philip Morris International has two companies in Russia: the Philip Morris Izhora factory in the Leningrad region and the Philip Morris Izhora Kuban branch in Krasnodar. He also owns Philip Morris Sales and Marketing, an organization with branches in about 100 cities in Russia. Together they employ about 3,200 people. Total investment in Russia exceeded $2 billion.

During the war in Ukraine (since 2017), Philip Morris has invested more than 14 billion rubles in the localization of tobacco sticks for IQOS at the factory in the Leningrad region, and the total investment in the factory opened in the Leningrad region exceeds $1.1 billion.

According to the NACP, which included the RMI in the list of international sponsors of the war, in 2012, the income tax to the Russian budget amounted to the equivalent of $136 million. By the end of 2023, this amount may be even higher. Philip Morris complains that Russia has canceled double taxation agreements, so it will have to pay more.


Once again, I would like to point out that the Cabinet’s proposal to grant tax preferences to Philip Morris smacks of outright corruption.

But this is not the only disturbing trend.

The Cabinet wants to eliminate the register of war sponsors. This is a list of companies operating in Russia, paying taxes to the Russian budget, and thus sponsoring the war.

There are many companies that operate in Ukraine and Russia at the same time. Classic examples include retail chains, banks, and sweets manufacturers. But few people talk about tobacco companies, particularly Philip Morris.

Since the beginning of the great invasion, foreign companies in Russia have been divided into two large groups. The former chose the path of withdrawal from Russia, even at the cost of billions of dollars in losses. Unfortunately, as of the end of 2022, only 9% had fulfilled their promise. Most of them decided to keep their businesses and instead used diplomats to put pressure on Ukraine.

Surprisingly, they succeeded: The Cabinet of Ministers is going to remove from the public information field the names of companies that are hindered by such “publicity”. The moral dilemma was resolved at the expense of Ukraine.

The United States, China, France, Switzerland, Germany, and Japan are the countries whose companies are among the top 10 in this ranking. Should we be surprised that diplomats from these countries are putting pressure on the Cabinet of Ministers of Ukraine to stop ruining these companies’ reputations?

Among these companies is Philip Morris, whose shares are traded on the New York Stock Exchange (NYSE), the most respected stock exchange in the world. She may be among those who will shyly hide the fact that she is financing the war in Ukraine.

In my opinion, if tobacco companies don’t want to leave Russia, that’s their business. But surely they should not enjoy tax benefits in Ukraine, which Russia shells every day for the money it received as taxes from the sponsors of the war.

Author: Serhiy Lyamets