Illegal tobacco is being sold openly: in queues, at central markets, just a few blocks from the tax office. The share of the grey market has reached 20%, and for every pack sold, the state budget loses around 400 tenge.
Founder of FBRK Kirill Pavlov conducted an investigation in several cities in Kazakhstan and found out how the system works, who is behind it, and why the state has failed to close this loophole after all these years.
HOW IT WORKS
During the investigation, we recorded typical methods of concealment: the goods are packed in black bags, and payment and collection points are separate. However, finding a seller is not difficult - just go to the market.
In Aktobe sales are concentrated at the central market. In Shymkent the points are scattered around the "Akbar" market - in close proximity to the Al-Farabi district tax office. In Karaganda there is a boutique called SIGARETTO in the "Ush mysyk" shopping centre with a wide range of products and bonuses on purchase. In the first part of the investigation we recorded a similar picture in Shymkent, Astana and Temirtau.
Smuggled cigarettes cost half as much as legal ones: a pack of Marlboro - 400 tenge, Oris - 500 tenge. It is this price difference that creates sustained demand, especially against the backdrop of falling real incomes for the population.
WHERE THE GOODS COME FROM
According to FBRK, wholesale sales are concentrated along the border of Zhambyl Region with Kyrgyzstan. We are not stating exactly where the goods come from. However, in Pavlov's opinion, this section of the border requires close attention.
Questions about the transparency of logistics routes in the region have been raised not only by FBRK. As part of the 20th package of European Union sanctions, a number of companies from Kazakhstan and Central Asia came under restrictions - including for their alleged involvement in supplying goods circumventing sanctions regimes via Kyrgyz territory.
HOW MUCH THE BUDGET LOSES
The share of the grey market, according to FBRK, is between 15 and 20% with the highest figures in the south of the country, in Almaty and Shymkent. Through unclosed border loopholes, over $3.5 billion has already been lost from the state budget. For every illegal pack sold, the state loses around $1 (400 tenge): no excise duties, no taxes.
In the first part of the investigation, we cited data from MPs on discrepancies in reporting at the border between Kazakhstan and China for just 2024 - almost $14 billion. These funds would have made it possible not to raise VAT and not to increase utility tariffs.
WHO GOT CAUGHT
In March 2024, the Financial Monitoring Agency put a citizen of the Republic of Kazakhstan, Sergey Pavlovich Burya, on the wanted list. According to the investigation, he is suspected of smuggling cigarettes worth 1 billion tenge. The Prosecutor General's Office, together with Interpol, extradited him from Russia. FBRK is preparing a detailed report on this case separately.
WHY THIS AFFECTS EVERYONE
Budget losses from illegal tobacco are not an abstract figure. According to FBRK's assessment, there is a direct link between the scale of the grey market and the increase in the tax burden on citizens: higher VAT, the abolition of the simplified tax regime, and rising utility tariffs. The bill is sent to everyone - smokers and non-smokers alike.
The border with Kyrgyzstan raises questions not only for FBRK. The same routes are subject to complaints from the USA and the European Union. Meanwhile, there has been no official reaction from Kazakh state bodies to the scale of the problem to date.