Category: Taxation

U.K. Launches New Track-and-Trace System

Photo: Uzfoto
The United Kingdom has a new track-and-trace system for tobacco products, established and operated by Dentsu Tracking. Launched on July 1, the system provides the U.K. government with digital, data-driven traceability functionality across the entire tobacco supply chain. The system is part of the U.K.’s anti-illicit trade strategy, supporting Her Majesty’s Revenue & Customs’ (HMRC) efforts to fight illicit trade.
“We are honored to work with HMRC and help the U.K. in the fight against illicit tobacco trade,” said Philippe Castella, managing director of Dentsu Tracking, in a statement. “Our digital system is tailored to the policy objectives of HMRC and designed to address the specific characteristics of the U.K. market. This ensures that the system provides HMRC with the highest level of visibility and government control over the entire U.K. tobacco supply chain.”
The new track-and-trace system leverages the advantages of digital technology to enable the movement of legal tobacco products to be monitored (tracking) and allow U.K. authorities to detect and fight the different forms of illicit trade, thereby curbing the circulation of non-compliant products for which taxes have not been paid and that do not meet all legal requirements in terms of content and packaging. Reducing the circulation of non-compliant tobacco products enables the U.K. to increase national tax collection while protecting citizens and legitimate businesses.
The new system was designed in line with all applicable U.K. and international laws, including full compliance with the FCTC Illicit Trade Protocol that requires parties to ensure the tracking and tracing of tobacco products along both manufacturing and key distribution points.
By integrating sophisticated data analytics tools, Dentsu’s system transforms the collected supply chain data into meaningful information that helps U.K. authorities to identify potentially fraudulent events. The new U.K. system supplies HMRC with real-time detailed analyses, statistics and alerts, which some stakeholders have already described as “groundbreaking,” according to Dentsu.
“At Dentsu Tracking, we strongly believe that the added value of tracking and tracing is only as strong as the level of supply chain insights that the system delivers to government bodies,” said Jan Hoffmann, director of government business. “Collecting data therefore is not enough. We generate powerful business intelligence that will help the U.K. authorities to carry out targeted controls and real-time investigations in the field.”
All businesses engaged in the manufacture, importation, exportation, storage, distribution and sale of tobacco products into and through the U.K. supply chain must use the new track-and-trace system. Track-and-trace requirements have existed in the U.K. since May 2019 and currently apply to cigarettes and roll-your-own tobacco. All other tobacco products will have to comply with the requirements from May 20, 2024.
Dentsu Tracking was appointed as provider for establishing and operating a new U.K. tobacco track-and-trace system in November 2021 by means of a public procurement process. Dentsu replaces the previous provider De La Rue.
July 7, 2022
Kazakhstan to Raise Excise on Tobacco

Kazakhstan will increase excise taxes on cigarettes and heated-tobacco products next year, reports Kazinform, citing the country’s national economy minister, Alibek Kuantyrov.
During a session of the Majilis, Kazakhstan’s Lower House of Parliament, Kuantyrov announced that by 2024, cigarette excise taxes should be no lower than €28 ($29.94).
It was also suggested to raise excise taxes on other tobacco products, such as heated-tobacco, to harmonize tobacco product excise within the Eurasian Economic Union. According to the minister, this will require a staged increase in duties.
May 27, 2022
New South Wales Sets High Fines for Youth Sales

Photo: Atstock Productions | Adobe Stock
More than $1 million worth of illegal e-cigarettes and liquids containing nicotine have been seized in New South Wales (NSW), Australia, this year.
NSW Health has seized more than $3 million of the banned products since July 2020.
Since October 2021, products containing nicotine are only available for people over the age of 18 when prescribed by a medical practitioner for smoking cessation purposes, from an Australian pharmacy or via importation into Australia with a valid prescription, according to 7News.
For all other retailers in NSW, the sale of e-cigarettes or e-liquids containing nicotine is illegal.
The curb on illegal nicotine sales extends to online shops with the maximum penalty of $1,650 per offense, six months in prison or both.
Selling to minors also comes with hefty fines. For individuals, up to $11,000 for a first offense and up to $55,000 for a second or subsequent offense; and for corporations, up to $55,000 for a first offense and up to $110,000 for a second or subsequent offense.
Chief Health Officer Kerry Chant said retailers were being put on notice if they were selling the contraband products. “We are cracking down on the illegal sale of nicotine e-cigarettes and liquids and taking a zero-tolerance approach to those who sell them,” she said.
“NSW Health regularly conducts raids on retailers across the state to protect young people from these harmful devices. You will be caught, illegal items will be seized, and you could face prosecution, resulting in being fined or even jailed.
“The harmful impacts of vaping on young people cannot be underestimated. People think they are simply flavored water, but in reality, in many cases, they are ingesting poisonous chemicals that can cause life-threatening injuries.”
The Alcohol and Drug Foundation says around 14 percent of 12-year-olds to 17-year-olds nationwide have tried an e-cigarette, with around 32 percent of these students having used one in the past month. Around 12 percent of students reported buying an e-cigarette themselves.
May 17, 2022
Bangkok to Impose Tobacco Tax

Photo: anankkml | Adobe Stock
According to the Bangkok Metropolitan Administration (BMA), the city will implement its first-ever tobacco tax. The new structure will tax each cigarette up to THB0.10 ($0.003) satang per stick, according to Thaiger.
The Tobacco Tax for Local Maintenance is intended to limit tobacco consumption, and the tax collected will be used “for maintenance of Bangkok city,” according to Suthathip Son-iam, permanent secretary of the BMA.
Other jurisdictions in Thailand already have tobacco taxes in place, and many companies previously warehoused their cigarettes in Bangkok to avoid paying taxes prior to distribution.
“The new tobacco tax can be announced after the city finished amending the Bangkok Administration Act of 1985 to include tax collection and other related clauses under the Plans and Process of Decentralization to Local Government Organization Act of 1999,” according to Son-iam. Previous attempts to amend the act failed.
There is no date for the tax’s introduction as of yet; the Cabinet must approve it first.
May 6, 2022
Egypt Increases Prices Of Popular Cigarettes

Photo: Jose
Eastern Co. of Egypt has increased prices for 10 types of cigarettes, reports Egypt Independent
The retail price of Cleopatra Box (10 cigarettes) rises to EGP11.50 ($0.73), Cleopatra King Size (20 cigarettes) rises to EGP18.50 and Cleopatra Soft Queen (20 cigarettes) rises to EGP19.
In January 2018, the Egyptian House of Representatives approved an increase in cigarette prices to finance comprehensive health insurance by EGP0.75 per pack of 20 cigarettes, and an increase of EGP0.25 piasters every three years until the increase reaches EGP1.5 at the end of the period.
Eastern Co. is the largest producer of tobacco in Egypt. The company was established on July 12, 1920, by a decree from Sultan Ahmed Fouad.
March 2, 2022
South Africa Proposes New Vaping Tax

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The South African government will propose a new tax on vaping products to take effect in 2023, according to Vaping360.
The move follows the government’s announcement last year that it intended to tax e-liquids.
South African Finance Minister Enoch Godongwana outlined the new tax proposal as part of a package of new and increased excise taxes on tobacco, alcohol and high-sugar products. The vaping tax will appear in the 2022 Taxation Laws Amendment Bill, though it could be changed by Parliament before the bill is finalized. It is expected to be in place by Jan. 1, 2023, according to Godongwana.
The new tax would apply to all e-liquid products, regardless of whether they include nicotine, and it would be “at least” ZAR2.90 ($0.19) per mL, essentially doubling the price of retail e-liquid. The taxation rate is supposed to be equivalent to 40 percent of the most popular brand’s retail price.
South Africa currently has no specific governance on vaping products but is working to regulate the products under its tobacco laws.
February 25, 2022
Dentsu to Operate U.K. Track-and-Trace System

Photo: Tobacco Reporter archive
Her Majesty’s Revenue and Customs (HMRC) of the United Kingdom has appointed Dentsu Tracking with the establishment and operation of the new digital tobacco track-and-trace system, replacing the current provider, DeLaRue. The new system becomes operational on July 1, 2022.
“I am very pleased about HMRC’s decision to task Dentsu Tracking with the establishment and operation of the new digital U.K. tobacco track-and-trace system,” said Dentsu Managing Director Philippe Castella in a statement. “Dentsu Tracking brings a wealth of experience and expertise in supply chain control, and we are thrilled to team up with HMRC in their fight against the illicit tobacco trade, helping them to increase revenue collection and protecting citizens and legitimate businesses in the U.K.”
All businesses engaged in the manufacture, importation or supply of tobacco products in the U.K. will need to report their activities to the new track-and-trace system.
“Leveraging the advantages of digital technology, Dentsu will deliver a track-and-trace system tailored to the specifics of the U.K. market,” said Jan Hoffmann, director of regulatory affairs. “It will provide HMRC with a high level of government control over the tobacco supply chain, allowing enforcement bodies to detect the different forms of illicit trade and curb the circulation of noncompliant products. The new system also enables the U.K. government to comply with the WHO FCTC Protocol.”
Headquartered in Geneva, Switzerland, Dentsu Tracking is a provider of digital supply chain control solutions.
January 11, 2022
Turkey Raises Special Consumption Tax on Tobacco

Photo: Rawf8
Turkey has increased the special consumption tax on tobacco by 47.4 percent to TRY14.39 ($1.10) per pack, reports Bianet.
The special consumption tax is based on the domestic producer price index. It is calculated both as a minimum fixed tax and a fixed tax. Each of these has been increased from TRY0.48 to TRY0.7 lira for a pack of cigarettes.
The minimum price of a pack of cigarettes will be TRY22.85.
January 3, 2022
Switzerland to Debate Vapor Tax Plan

Photo: Stockfotos-MG
Switzerland’s Federal Council has put forward a plan to tax e-liquids, reports Le News, citing Radio Television Suisse.
The proposal calls for taxing e-liquids at a rate that is 77 percent lower than that levied on combustible cigarettes.
The government wants to discourage young people from taking up vaping without discouraging smokers from transitioning to less unhealthy products.
One idea is to tax the nicotine content in e-cigarette liquids for open systems. This would mean taxes rising with rising nicotine content. For single use e-cigarettes or devices using cartridges, the tax would be levied based on the quantity of liquid contained in them regardless of the nicotine contained in them.
According to the government, such a tax would be easy to put in place and would generate around CHF 15.5 million a year, money which would be used to help fund old age pensions and disability benefits.
The Federal Council’s proposal, which will be discussed until March 31, 2022, responds to a motion approved by the parliament and the Council of States in March 2021.
December 24, 2021
Study: Sin Taxes May Boost Unrelated Fraud

Photo: Fernando
Taxpayers targeted by hikes in “sin taxes,” such as those imposed on cigarettes may be more likely to defraud other individuals in unrelated transactions, according to a recent study published by SSRN.
The researchers propose two reasons why affected taxpayers might commit more fraud following a sin tax hike. First, tax increases can reduce the buying power of targeted taxpayers. This reduction in purchasing power could increase the value of additional income to affected taxpayers and, accordingly, their incentive to commit fraud.
Second, being treated unfairly makes cheating behavior easier to rationalize, even when the potential victims of fraud are not responsible for the taxpayer’s unfair treatment. Surveys consistently report that affected taxpayers view sin tax hikes as unfair, which suggests that they may find it easier to rationalize defrauding others in the aftermath of sin tax hikes.
The researchers tested the relation between sin tax increases and fraud using data from New York City tax rides. They found that taxi drivers who both smoke and had low earnings in the recent past are even more likely to increase their level of fraud following the tax hike. Given the modest earnings of most taxi drivers, they likely notice their increased costs from a cigarette tax hike. The pain from the tax increase is probably felt even more keenly by taxi drivers with low earnings in the recent past. As a result, these drivers commit more fraud.
According to the researchers the findings suggest that some types of tax hikes can have negative fallout that stretches beyond the taxpayer in person.
December 17, 2021