The State lost an estimated €229 million in taxes last year because up to 13% of cigarettes consumed here were illegal, according to the latest report of the Comptroller and Auditor General.
It estimates that around 4.3 billion cigarettes were consumed in Ireland last year.
However, it notes that the illicit tobacco trade is a global problem and an important source of revenue for international organised crime.
Last year, cigarettes and other tobacco products worth over €20m were seized, representing a potential loss to the Exchequer of more than €16m in taxes and duties.
This represents a detection rate of around 7%.
Between 2013 and March 2018, the Revenue seized €556,243 in cash arising from 34 cases, along with 265 vehicles and four ships.
One seized ship, the MV Shingle, has cost the State approximately €410,000 to date, with further costs still being incurred - although Revenue has been in a position to dispose of the vessel since July 2017.
On average, fines totalling €125,000 a year are imposed in the District Court, while the longest custodial sentence was six months.
In more serious cases, the average value of fines imposed was €3,200, while the longest custodial sentence was three years, with the last 18 months suspended.
The report says that factors such as price differentials across national borders, exchange rates and economic conditions can affect the level of tobacco smuggling.
The authorities recently discovered the first factory producing counterfeit cigarettes in Co Louth.