Tobacco raw materials to be placed under digital control: e-excise, GPS monitoring of transportation, and cameras in warehouses — draft law

Ukraine plans to significantly strengthen state control over the production and circulation of tobacco raw materials. For this purpose, draft Law No. 15372 "On Amendments to the Tax Code of Ukraine and Other Laws of Ukraine to Increase the Effectiveness of Control over the Production and Circulation of Tobacco Raw Materials" has been submitted to the Verkhovna Rada. It provides for the creation of a unified electronic traceability system for tobacco raw materials — from cultivation to use in the production of tobacco products.

It is noted that the legalization of the excise goods market, ensuring full tax payment, and blocking supply channels for resources used in illegal production are especially important under martial law, when the state needs to finance the security and defense sector.

The document emphasizes that effective control over finished tobacco products is impossible without control over the origin of tobacco raw materials, their movement, and reconciliation of the volumes of purchased and used raw materials with the quantity of legally produced products.

According to a Kantar Ukraine study from April 2026, the share of illegal tobacco products in Ukraine has risen to 19.8% of the market, with annual state budget losses from unpaid taxes estimated at UAH 33.3 billion. At the same time, cigarettes of Ukrainian manufacturers with counterfeit excise stamps account for 38% of counterfeit products. About 68% of illegal products are concentrated in only seven regions, and nearly two-thirds of illegal cigarettes are sold through kiosks and stores.

The draft law states that current legislation regulates licensing for tobacco cultivation, fermentation, and production of tobacco products but does not create a unified digital control system for tobacco raw materials — from land plots and harvests to packaging, storage, transportation, and use in production.

Attention is also drawn to the fact that existing state registers contain separate information about land plots, licenses, production, storage locations, and customs operations, but these data are not integrated.

Problems to be solved

The document lists the main shortcomings of the current system as:

• lack of a Unified Register of tobacco raw material producers;
• absence of mandatory electronic marking of tobacco raw material packages;
• lack of unified accounting of raw material weight considering normative moisture;
• insufficient control over transportation and storage of raw materials;
• absence of automatic reconciliation of information between state registers.

Because of this, the authors of the draft law note that controlling and law enforcement agencies cannot promptly detect discrepancies between declared sowing areas, volumes of grown raw materials, their movement, and the amount of legally produced products. This creates conditions for the use of raw materials of unknown origin in illegal production.

What the new control system will be like

The purpose of the draft law is to create a complete electronic traceability mechanism for tobacco raw materials — from tobacco cultivation, harvest collection, drying, and packaging to storage, transportation, fermentation, and use in the production of tobacco products.

To achieve this, it is proposed to:

• extend the operation of the Electronic Excise Goods Circulation System to tobacco raw materials;
• introduce electronic marking of each package of tobacco raw materials;
• create a Unified Register of tobacco raw material producers;
• ensure electronic information exchange between all state registers;
• establish unified rules for accounting weight and moisture of raw materials;
• strengthen requirements for production and storage sites;
• introduce remote control of tobacco raw material transportation;
• improve licensing, tax control, and liability for violations.

What the draft law provides

The document proposes including tobacco raw materials in the Electronic Excise Goods Circulation System. It will reflect the formation and use of electronic excise stamps, raw material balances, their movement between business entities, and use in production.

Each package of tobacco raw materials must receive an electronic excise stamp indicating the manufacturer, place of production, type and variety of raw material, its actual weight, weight adjusted to normative moisture, and other characteristics.

It is planned to create a Unified Register of tobacco raw material producers, which will include information about producers, land plots, sowing areas, coordinates, seed varieties, yields, and volumes of produced raw materials. The register will be integrated with the State Land Cadastre, State Agrarian Register, tax, customs, and other state information systems.

The document also establishes new requirements for producers.

For the production and storage of tobacco raw materials, sites must be equipped with round-the-clock video surveillance systems, access control systems, electronic scales, and moisture measurement devices.

Video recordings must be stored for at least 30 days, and access control system information for at least one year. Tax authorities and the Economic Security Bureau will have access to this data.

Additionally, remote control of tobacco raw material transportation is proposed. Carriers will be required to equip vehicles with special technical control devices that transmit information about the route and location of the vehicle in real time.

Liability for violations

The draft law provides for expanding grounds for conducting on-site inspections, suspension of licenses, and establishing liability for the use of unmarked or counterfeit tobacco raw materials, violations of video surveillance, weight, access control, and remote control requirements.

Unmarked tobacco raw materials will be subject to withdrawal from circulation with subsequent resolution on confiscation, and confiscated materials will be destroyed.

At the same time, the draft law preserves citizens' right to grow tobacco for personal consumption on household, garden, and summer cottage plots within the limits defined by the Land Code of Ukraine.

Its adoption is expected to increase transparency of the origin and movement of tobacco raw materials, reduce opportunities for illegal production, contribute to shrinking the shadow market, increase excise tax revenues, enhance the effectiveness of tax, customs, and law enforcement control, and create more transparent conditions for legal tobacco cultivation and production of tobacco raw materials in Ukraine.

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