British American Tobacco halts production in Ukraine on Oct 11
British American Tobacco (BAT), a large global tobacco manufacturer, halted production at the B.A.T.-Pryluky factory in Chernihiv region on October 11, 2019.
"As a company, we cannot produce products with which we do not know what to do. Because of this, we stopped production [the technical process of shutting down the enterprise was started on October 8]. The factory has been idle for the second week," Director General of B.A.T.-Pryluky Artiom Skrypka said on a local television channel.
The company on Friday morning confirmed this information to Interfax-Ukraine, indicating that the reason was bill No. 1049 adopted by the Verkhovna Rada with the requirement on the government regulation of the markup on their goods.
As reported, Philip Morris Ukraine, British American Tobacco, JTI and Imperial Tobacco in Ukraine are mulling the possibility of decreasing production and later closing the tobacco factories on the territory of Ukraine over the adoption of the legislative requirement on the government regulation of markup on their goods by the Verkhovna Rada.
Bill No. 1049, passed at second reading, introducing a single account for paying taxes and duties, the single social security contribution, sets a fixed markup for wholesale and retail traders of tobacco products at 7% and 13% of the maximum retail price per package.
Later, the Council of Entrepreneurs under the Cabinet of Ministers has asked Ukrainian President Volodymyr Zelensky to veto bill No. 1049 introducing a single account for paying taxes and duties, and the single social security contribution, as it deprives enterprises of the right to set prices for tobacco goods.
British American Tobacco has factories in 42 countries. In Ukraine, it owns B.A.T.-Pryluky factory. The factor exports products to Belarus, Armenia, Georgia, Moldova, Azerbaijan and Singapore.