Measures against Forestalling in Tobacco Companies: European Experience and Conclusions for Ukraine
Korotun V. I., Novytska N. V., Khliebnikova I. I.

Korotun, Volodymyr I., Novytska, Nadiia V., and Khliebnikova, Inna I. (2019) “Measures against Forestalling in Tobacco Companies: European Experience and Conclusions for Ukraine.” The Problems of Economy 2:134–144.
https://doi.org/10.32983/2222-0712-2019-2-134-144

Section: Finance and banking

UDC 336.228.324

Abstract:
Despite the effectiveness of excise policies to reduce the consumption of tobacco products, Ukraine, like most European countries, along with illegal traffic got the problem of optimizing the payment of excise tax on tobacco products in the form of forestalling. The essence of this phenomenon lies in the accumulation in tobacco manufacturers’ warehouses of products with excise stamps acquired before the increase in the excise tax rates. It is proved that EU countries, in response to the challenges, have introduced anti-forestalling measures, depending on the specifics of excise taxation and control over the turnover of excisable goods, which are classified into four types: establishing cap on tax stamps, cap on release for consumption; setting the sell-by date at wholesale or at wholesale and retail simultaneously; paying the tax difference. The trends in and volumes of forestalling in Ukraine are estimated, and, on this basis, losses of the excise tax from tobacco products are calculated. There proved the inefficiency of the functioning of the current Ukrainian anti-forestalling regulation which involves restricting the acquisition of excise duty stamps in the fourth quarter of the reporting year. Based on the best European practices, in Ukraine, there proposed a new methodology of anti-forestalling regulation, which combines the establishment of quotas for the sale of excise duty stamps using the final date of sale of tobacco products at wholesale and retail.

Keywords: anti-forestalling regulations, tobacco products, excise duties on tobacco, tax losses, tax gap.

Fig.: 10. Formulae: 1. Bibl.: 8.

Korotun Volodymyr I. – Candidate of Sciences (Economics), Senior Research Fellow, Director, Research Institute of Fiscal Policy at the University of the State Fiscal Service of Ukraine (31 Universytetska Str., Irpіn, Kyiv region, 08201, Ukraine)
Email: tax2010@i.ua
Novytska Nadiia V. – Candidate of Sciences (Economics), Head of Department, Department of Excise Tax Studies, Research Institute of Fiscal Policy at the University of the State Fiscal Service of Ukraine (31 Universytetska Str., Irpіn, Kyiv region, 08201, Ukraine)
Email: n.novitska@gmail.com
Khliebnikova Inna I. – Candidate of Sciences (Economics), Senior Research Fellow, Department of Excise Tax Studies, Research Institute of Fiscal Policy at the University of the State Fiscal Service of Ukraine (31 Universytetska Str., Irpіn, Kyiv region, 08201, Ukraine)
Email: khlebnikova.inna@ukr.net

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