Category: Taxation

EU: Travelers Should Pay Duties at Home Rate

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The EU has suggested that consumers buying tobacco and alcohol across borders should pay the duties of their home states rather than the rate of the country in which the products are purchased, reports The Independent.
The EU is also considering mandatory or lower limits on the amount of alcohol and tobacco products that can be brought back from other EU countries for personal use. The proposed changes are meant to help governments recoup lost excise duties and protect public health.
“For both alcohol and tobacco products, the misuse of cross-border shopping rules for private individuals is a source of concern for several EU countries due to lost revenues and the negative impact on the effectiveness of national public health policies,” the European Commission said in the public consultation
The proposed rule would have the greatest impact on Ireland, which is one of the most expensive places in the EU to buy tobacco and alcohol. Northern Ireland too would be included in any future policy change as, under the 2019 Brexit deal, it mirrors EU rules on VAT and excise duties.
The EU public consultation on the issue will remain open until April 23, 2021
February 3, 2021
Tobacco Tax Collections up in Germany

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Germany taxes $34.7 billion worth of tobacco products reports Xinhua, citing the country’s Federal Statistical Office (Destatis). This is an increase of 5 percent year-on-year.
The quantity of fine-cut rolling tobacco taxed last year increased by 10.6 percent. The quantity of pipe tobacco taxed rose 44.3 percent.
Covid-19 lockdowns and border closures played a role in the growth of fine-cut cigarettes. “In search of an alternative to the lower priced cigarettes from abroad, consumers probably increasingly turned to fine-cut to roll their own cigarettes,” stated.
Cigarette sales fell by 1.1 percent to 73.8 billion pieces. Taxed retail sales values for cigarettes rose 43.5 percent.
January 21, 2021
EU Urged to Embrace Risk-Based Taxation

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The EU should embrace a risk-proportionate tax system for tobacco-related products, according to the Independent European Vape Alliance (IEVA).
“Revising the current Tobacco Excise Directive presents an opportunity to apply the right incentives for current smokers to improve their health, ideally by stopping the use of nicotine altogether but also by switching to reduced-risk alternatives where this is impossible or unlikely for the individual smoker,” the IEVA wrote in its response to the EU excise duties roadmap.
“Vaping has been found to be significantly less carcinogenic than smoking and an acceptable replacement for cigarettes for many smokers. It follows that any policy designed to reduce cancer rates through prevention must focus on the needs of this particularly at-risk section of the population.”
The consultation period for the revision of excise duties is scheduled for the first quarter of 2021, and commission adoption is scheduled for the fourth quarter of the year.
The feedback period to the roadmap closed on Jan. 5.
January 6, 2021
‘Altria Pushed Cigarette Floor Price’

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Colorado passed its recently enacted minimum cigarette price at the request of Altria Group, according to e-mails obtained by The Colorado Sun.
The cigarette giant reportedly asked Colorado Governor Jared Polis’ office to meet several conditions in exchange for agreeing not to fight legislation that put a question on the November ballot asking voters to raise tobacco and nicotine taxes in Colorado.
One of those conditions was adding a clause to the measure that requires a pack of cigarettes to be sold for at least $7 starting this year. The move is seen as benefiting Altria, which competes primarily in the premium cigarette segment.
“It’s like forcing our Honda to sell for the same amount as Mercedes,” Craig Hughes, a high-powered Democratic political consultant, wrote about the minimum-price clause in a June 3 email to Cary Kennedy, a senior adviser to Polis, according to The Colorado Sun.
The U.S. discount cigarette manufacturers Liggett Group, Vector Tobacco and Xcaliber International filed legal complaints, alleging that the minimum price was anti-competitive and anti-consumer.
Liggett Vector’s lawyers are arguing in state court that Proposition EE violates Colorado’s single-subject rule in the state constitution, which requires legislation to address only one topic at a time. In federal court, the company is arguing that the ballot initiative violates interstate commerce laws.
The lawsuits remain pending, though a federal judge last week rejected Liggett Vector’s request for a preliminary injunction that would have temporarily invalidated the minimum-price provision.
In a written statement to The Colorado Sun, Governor Polis’ office described the proposition that includes the minimum price requirement as a “win-win” for the state of Colorado. “We are able to fund free universal preschool for every child while protecting children and other vulnerable populations from cheap, harmful and addictive nicotine products.”
Polis and the health groups failed to pass a similar tobacco and nicotine tax increase bill in 2019 in large part because big tobacco interests successfully lobbied against the measure.
In 2016, Altria spent more than $16 million to block a tobacco tax increase that was on the ballot in Colorado.
January 6, 2021
‘Smoke Locally’ Law Tabled in France

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French Parliament member Bruno Fuchs recently introduced a draft bill proposing that cigarettes must be consumed in the same country that they were purchased. According to Fuchs, about one-third of the 54 billion cigarettes consumed in France were purchased abroad by either legal or illicit means.
Of primary concern are cigarettes purchased in Luxembourg by French travelers and brought home. The difference in price of a pack of cigarettes in France and Luxembourg is €3 ($3.68). If Fuchs’s measure is approved, France could generate about €2 billion in additional tax revenue.
January 2, 2021
Turkey Lowers Tax on Tobacco Products

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Turkey has lowered the special consumption tax on cigarettes and tobacco products to 63 percent, reports Reuters, citing the Official Gazette
The special consumption tax was previously 67 percent. The fixed tax amount will remain unchanged from levels announced in July for the first six months of 2021.
The move could help ease upwards pressure on inflation. Alcoholic beverages and tobacco make up 6.06 percent of the inflation basket. Cigarettes make up a large part of that component.
December 25, 2020
UAE To Require Digital Tax Stamps for Vapor

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Starting Jan. 1, shisha and vapor products will have to carry digital tax stamps (DTS) in the United Arab Emirates, reports the Khaleej Times, citing the Federal Tax Authority (FTA) said.
These products cannot be sold, transported, stored or possessed without the tax stamp.
According to the FTA, the DTS system will improve tax collection and enable stakeholders to analyze the supply chain to better control illicit tobacco products.
In addition, the DTS system allows for the implementation of compliance standards and facilitates inspection and control at customs outlets and local markets.
The digital stamps will be placed on the packages of tobacco products and registered in the FTA database. The DTS contains data that can be read with a special device to make sure all taxes due have been paid.
The tax stamp legislation had previously been scheduled to come into effect on June 1, 2020. However, authorities postponed the deadline to address challenges posed by the coronavirus pandemic.
December 23, 2020
Indonesia: Tobacco Bracing for Tax Hikes

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The government of Indonesia will increase the excise tax on tobacco and tobacco products in 2021, according to a report in The Jakarta Post.
The increase is expected to negatively affect cigarette makers amid weakened purchasing power in the pandemic, according to analysts.
Cigarette excise taxes will be increased by an average of 12.5 percent in February 2021.
“The majority of the companies’ sales volume comes from machine-made clove cigarettes, including those of Sampoerna and Gudang Garam,” Mirae Asset Sekuritas analyst Christine Natasya wrote in a research note.
The increase applies only to machine-made clove cigarettes and machine-made white cigarettes, according to Finance Minister Mulyani Indrawati. The hand-rolled cigarette excise tax will remain the same.
December 16, 2020
Trade Body Holds Seminar on Tax Stamps

Photo: ITSA
The International Tax Stamp Association (ITSA) will hold a seminar on Dec. 3 examining the central role tax stamps play in securing revenues as international supply chains continue to be threatened by counterfeiters and smugglers take advantage of the Covid-19 pandemic to trade in illicit tobacco.
The trade in fake tobacco is worth between $40 billion and $50 billion annually worldwide and churns out more than 600 billion fake cigarettes, according a 2020 World Bank Report.
Properly implemented tax stamp and traceability programs can help governments protect and recoup much-needed revenues as they battle to get their public finances back on track, says ITSA.
“The need for tax programs has increased dramatically in the global coronavirus pandemic, which has seen government revenues plummet, deficits rise, and debt levels swell to eye-watering proportions,” said Juan Carlos Yanez, chair of ITSA.
“Whether your country, state or jurisdiction currently uses a tax stamp scheme or is considering introducing such a scheme, it would be worth finding out what a modern initiative can deliver and why now is the right time to introduce or expand your current scheme.”
Webinar attendees also have the chance to discuss the importance of effective production monitoring and the need for a global information sharing focal point that facilitates the exchange of important data and best practice between countries.
More than 150 revenue agencies (national and state governments) globally use tax stamps to collect tax duties and excise payments, involving the worldwide production of some 140 billion stamps annually. As well as providing visible proof of tax payment and revenue collection, tax stamps have also taken on a key role in product authentication, anti-tampering and track and trace applications.
November 27, 2020
Malaysia Announces New Duties

Malaysia will implement an excise duty at an ad valorem rate of 10 percent on all types of vapor and e-cigarette products, reports The Star. Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz says the tax includes all types of electronic and non-electronic cigarette devices, including e-liquids.
Electronic cigarettes liquid too will be subjected to an excise duty at a rate of MYR0.40 sen [$0.10] per milliliter. The tax takes effect on Jan. 1, 2021.
Tengku Zafrul said taxes would be imposed on cigarettes and tobacco products on all duty-free islands and any free zones that have been permitted retail sales of duty-free cigarettes. He added that the issuance of new cigarette import licenses would also be frozen.
He said that the transhipment of cigarettes activities to selected ports would also be limited.
“We will impose taxes on drawbacks on all imported cigarettes for the purpose of transhipment and re-exports,” he said, adding that transhipment activities and re-exports of cigarettes using pump boats would also not be allowed.
November 9, 2020