Objective: There is still a large illicit tobacco market in many countries, especially in Eastern Europe. There can be external and internal causes that affect illicit tobacco market: geographic factors, price differences, legislative gaps, low administrative capacity, etc. The aim of the research is to develop proposals for improvement of a methodology of estimation of illicit tobacco market. The framework of research is policy, administration and cooperation. Methodology: The impact of illicit market can be measured as excise tax gap by using top-down methodology. However, the methodology for estimation of illicit tobacco market could be improved by reviewing health survey questionnaires and using outcome data for more detailed analysis. Originality: The author proposes improving the scope and methodology of the health survey, so that it covers specific products as well as where those products are purchased. Results: Data used from the survey about respondents smoking habits helps to estimate the total cigarettes smoked. In 2020, the legitimate consumption in Latvia was 2 billion cigarettes, suggesting that illicit consumption is about 200 million cigarettes as well as estimated losses of revenues were about 23 million EUR