Up to 10 years in prison for counterfeit alcohol that harmed people
In Ukraine, responsibility for the illegal circulation of alcohol, tobacco products, e-cigarette liquids, and fuel may be significantly tightened. The Verkhovna Rada Committee on Law Enforcement reviewed its decision regarding the relevant bill and recommended that parliament adopt it in the second reading and as a whole law.
The document provides for a comprehensive update of administrative and criminal sanctions, introduces new types of offenses, distinguishes between administrative and criminal liability depending on the nature of the violation, and also changes the rules for seizure, confiscation, and destruction of illegal excise goods.
The changes are aimed at combating the large shadow market. According to the Verkhovna Rada Committee on Finance, Tax and Customs Policy, over 2 million liters of unaccounted alcohol may be in circulation monthly in Ukraine, and in 2023 the share of the illegal tobacco market was 21.9%. Estimates also indicate about 40% of the "gray" fuel market.
Why the legislation was decided to be changed
The authors of bill No. 9364 point out that a significant number of cases related to illegal circulation of excise goods are closed by courts. In 2022, 64% of cases under Article 156 of the Code of Administrative Offenses were closed, 78% under Article 161-1, 84% under Article 164, 79% under Article 164-5, and 73% under Article 177-2. Under Article 204 of the Criminal Code, 18% of proceedings were closed.
The current legislation does not always allow for effective response to violations and proper differentiation between administrative and criminal offenses.
What is proposed to be punished more severely
The bill proposes to establish or strengthen liability for:
- trading alcohol, tobacco products, and other excise goods without state registration as a business entity;
- purchase, storage, transportation, mailing, and sale of excise goods without excise tax stamps or with counterfeit stamps;
- illegal storage of excise tax stamps;
- sale or free distribution of tobacco raw materials, raw materials for e-cigarette liquids, and nicotine separately or in sets;
- violation of the prohibition on storage and transportation by individuals of alcohol and tobacco products without excise stamps;
- illegal manufacture of excise goods and other forms of their illegal circulation.
Which fines may increase
The bill provides for a significant increase in certain financial penalties.
In particular, for some violations, the fine is proposed to be increased from 17,000 UAH to 51,000 UAH. For another type of offense, the sanction is planned to be raised from 6,800 UAH to 34,000 UAH.
Additionally, the document generally raises administrative fines for violations of rules regarding the trade of alcohol, tobacco products, and e-cigarettes.
Up to 10 years imprisonment for dangerous counterfeit products
One of the most important novelties is the new version of Article 204 of the Criminal Code on illegal circulation of excise goods.
For illegal manufacture of excise goods, a punishment of imprisonment from 3 to 5 years is proposed.
If such products posed a threat to life or health of people or their consumption resulted in death or other serious consequences, the punishment may be from 8 to 10 years imprisonment with confiscation of property.
Minor offenses to be removed from the criminal sphere
At the same time, the bill provides for a clearer distinction between administrative and criminal liability. The authors note that currently criminal proceedings are opened even for insignificant quantities of products.
Examples of sentences for selling 1.25 liters of alcohol, 5 liters of vodka, or storing 30 liters of alcohol-water mixtures are cited. Therefore, it is proposed that criminal liability be applied primarily to significant volumes of illegal products and their illegal manufacture.
What will change regarding seizure and destruction of products
A separate block of changes concerns the procedure for handling seized goods.
The bill improves the procedure for accounting, storage, confiscation, and destruction of excise goods, equipment for their manufacture, and excise stamps. It also proposes to prohibit transferring seized excise goods to offenders for responsible storage until a court decision is made.
At the same time, illegally manufactured alcoholic beverages, tobacco products, and e-cigarette liquids after confiscation will be subject to destruction.
How the document was refined before the second reading
The bill was adopted by the Verkhovna Rada as a basis on April 23, 2024. During preparation for the second reading, it was comprehensively revised following the adoption of Law No. 3817-IX on state regulation of production and circulation of alcohol, tobacco products, e-cigarette liquids, and fuel, as well as after amendments to the Tax Code.
Before the second reading, 280 amendments and proposals were submitted. Of these, 48 were fully accepted, 13 editorially, 106 partially. 113 amendments were rejected.
Following the review, the Verkhovna Rada Committee on Law Enforcement recommended parliament adopt bill No. 9364 in the second reading and as a whole law.
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