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24 Ağu 2023

Economichna Pravda

Ukraine: Govt. adds Philip Morris & Japan Tobacco to war sponsors list for their continued presence in Russian market

Ukraine's National Agency on Corruption Prevention adds two global tobacco companies to list of war sponsors, 24 August 2023

The Ukrainian National Agency on Corruption Prevention (NACP) has added two of the world's leading tobacco companies to the list of international sponsors of the war: Philip Morris International and Japan Tobacco International. Both companies maintain their businesses in Russia and pay significant taxes to the Russian coffers...

Philip Morris International in Russia comprises two affiliated companies: the factories of Philip Morris Izhora joint-stock company in Leningrad Oblast and Philip Morris Izhora Kuban branch in Krasnodar, as well as Philip Morris Sales and Marketing Limited Liability Company with branches in roughly 100 cities across the country...

The NACP stressed that the company is one of the largest taxpayers to the Russian treasury, which then funds the Russian Armed Forces.

...Based on the financial statements of Philip Morris' Russian subsidiary, the company's revenue in the first year of Russia's full-scale invasion of Ukraine jumped 8% to RUB 140.3 billion...and net profit to RUB 48.2 billion [roughly US$509,7 million], up 45% from 2021. The company paid over US$136 million in income tax to the aggressor state's coffers.

"Notably, at the beginning of Russia's full-scale invasion of Ukraine, Philip Morris announced its intention to dispose of its Russian business in order to preserve its reputation. However, all 'attempts' to sell the Russian operation seem to have been failures, and the corporation still remains one of the largest taxpayers to the Russian treasury," the NACP added.

Japan Tobacco International (JTI) is the undisputed leader of the tobacco market in Russia (with a market share of around 34.9%) and is one of the country's largest FMCG companies in terms of sales.

The company's portfolio in the Russian market includes international brands such as Winston, LD, Mevius, Camel, Sobranie and Russian brands such as Donskoy Tobacco, Kiss, Play, Peter I, Troika and others.

Over the past 20 years, JTI's investments in the Russian economy have exceeded US$4.6 billion. The company's tax payments in 2020 accounted for 1.4% of Russia's federal treasury revenue.

The Russian market generated about US$2 billion for JT Group in 2022, or approximately 11% of its 2022 consolidated revenue.

Although JTI representatives claimed that the JT Group has suspended new investments and marketing activities in Russia, the company still continues to manufacture and distribute products in Russia...

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