Mitigating Illicit Trade- Success in Montenegro and Bosnia and Herzegovina

This Policy Brief was written by Smoke-Free Partnership and Economics for Health. The policy brief explores the recent reduction in illicit tobacco trade in Montenegro and Bosnia and Herzegovina, highlighting lessons from these successes. In Montenegro, the approximate share of illicit consumption declined from 51% in 2019 to 25% in 2022, as the government implemented a number of best practices to control the supply chain. Montenegro has also been regularly implementing excise tax increases, leading to a substantial increase in excise tax revenues, from 46.3 million euros in 2019 to 119.2 million euros in 2024. Bosnia and Herzegovina reduced its illicit trade as well, as the approximate share of consumption decreased 32% in 2019 to 8% in 2025. The country strengthened its tax administration and enforcement efforts, although some challenges remain. Excise tax revenues in Bosnia and Herzegovina increased, from 443.39 million euros in 2019 to 583.35 million euros in 2024. In both countries, illicit trade was reduced through governance, enforcement, and supply-chain controls, while higher excise taxes helped raise additional tax revenue. The brief concludes with key takeaways, especially relating to the ongoing revision of the EU Tobacco Tax Directive.