The Smoke-Free Industry Association and the Latvian Association of Traders jointly organized the discussion “Challenges and Perspectives on Reducing Smuggling in the Eastern Border of Latvia.” The event took place in Rēzekne and was attended by representatives of law enforcement agencies, the industry, and the Rēzekne Municipality Council.
Experts in the discussion emphasized that Latvia’s eastern border plays a crucial role in national security and the economy. At the same time, this region faces additional challenges due to the continuous inflow of smuggled goods, heavily influenced by its proximity to the eastern border. Smuggled goods, such as tobacco products, enter the country primarily by rail, although in much smaller volumes than before, as the movement of goods on the eastern border has been significantly reduced due to sanctions.
According to the market research company Nielsen, the volume of illegal cigarettes in Latvia represents 19.1% of the total market last year. This means that nearly every fifth cigarette in the country is purchased in the illegal market—without paying taxes. In 2023, the Latvian state budget lost more than €40 million due to unpaid taxes on illegal cigarettes.
Analyzing the spread of illegal cigarettes in Latvian cities, a significant proportion was found in Daugavpils (48.3%) ,Rēzekne (33%), Salaspils (28.4%), Cēsis (28%).
The largest share of illegal cigarettes in Latvia still comes from Belarus. Last year, nearly one in ten illegal cigarettes—9.8% of the total illegal cigarette volume—originated from Belarus. However, this is a significant decrease compared to 2021 when 67.2% of illegal cigarettes in Latvia came from Belarus.
Experts have identified a new trend—local illegal operators in Latvia have started counterfeiting Belarusian-brand cigarettes. To make these counterfeit products appear genuine, they use real excise tax stamps illegally imported from Belarus.
During the discussion, experts noted that cigarette counterfeiting is rapidly increasing. Last year, counterfeit cigarettes accounted for 40% of all illegally consumed cigarettes. A significant portion of these counterfeit products was produced in the Latgale region and border areas. This was confirmed by the discovery of an illegal cigarette manufacturing facility in Ludza by the State Border Guard last year. According to experts, this was the largest illegal factory uncovered in Europe in recent years.
Illegal trade also significantly affects smokefree alternatives, such as heated tobacco, electronic cigarettes, and nicotine pouches. Despite expert recommendations, Latvia continues to impose new sales bans and restrictions on these products. These regulations contribute to illegal online sales, cross-border trade between EU countries, and an influx of low-quality smuggled products from outside the EU. According to research by economist Professor Arnis Sauka, in 2023, the illegal market for electronic cigarettes and nicotine pouches accounted for nearly 30% of total product sales.
To reduce smuggling and the circulation of illegal products in Latvia, particularly in the Latgale border region, experts highlighted several necessary measures. The state must continue improving infrastructure and technical equipment at border checkpoints, as well as addressing human resource issues. Law enforcement agencies are struggling with a shortage of qualified specialists with specific expertise. This is largely influenced by generational turnover and salary concerns.
Furthermore, experts emphasized the importance of a well-thought-out national policy on taxation, restrictions, and bans. Banning products that are freely available in neighboring countries is counterproductive, as such bans only increase illegal trade and cross-border smuggling. This not only places additional strain on law enforcement agencies but also results in significant tax revenue losses. Instead of benefiting the Latvian economy, these funds either go to the budgets of neighboring countries or into the pockets of illegal operators.
Moreover, new restrictions and additional bans—such as those on cigarette alternatives—draw consumers into the illegal market who would not have otherwise considered purchasing such products illegally.
After the discussion, participants had the opportunity to visit the Customs cynology center, where customs dogs are trained, thus gaining valuable insights into their work.
