Illicit cigarettes accounted for over 20% of consumption across the Maghreb region in 2016. However successful prevention strategies have resulted in a 24% decline since 2015, said the Amsterdam based professional service and auditing company KPMG in a recent study.
The study, dubbed “Illicit Cigarette Trade in the Maghreb Region,” shows the 13 billion smuggled cigarettes consumed represented over $565 million in lost tax revenues, when taking into account both taxation on cigarettes and import related tariffs where applicable.
Over 80% of illicit cigarettes consumed were Illicit White brand flows: cigarettes identified with no legal distribution within the countries of study, the same source said.
It noted that over 7.4 billion of the illicit cigarettes are believed to originate from trademark owners based in UAE Free Trade Zones.
Additional investment in land border security, including fences, trenches and surveillance drones, may have contributed to this decline, the study, conducted in partnership with the London-based think tank, the Royal United Service Institute (RUSI) said.
It added that Algeria, the highest outflow country in the region, has the lowest cigarette prices with a decline in outflow from 6.6 billion to 5.1 billion between 2015 and 2016, amidst a joint effort by both law enforcement and cigarette manufacturers to reduce the flows of cigarettes to neighboring countries.