Tag: security devices

  • UAE Postpones Digital Tax Stamps

    UAE Postpones Digital Tax Stamps

    Photo: Gerd Altmann from Pixabay

    The United Arab Emirates Federal Tax Authority (FTA) has postponed the starting date of its requirement for waterpipe tobacco and electrically heated cigarettes to carry digital tax stamps until Jan. 1, 2021, reports Gulf News.

    The measure, which seeks to discourage commercial fraud, minimize health risks and combat tax evasion, had previously been scheduled to come into effect on June 1, 2020.

    The FTA explained that the deadline was extended to address the challenges posed by the coronavirus pandemic, which is preventing producers, importers, distributors and stockpilers from meeting the previously set deadline.

    “This extension on the timeline provides them with seven additional months to prepare for the mandatory implementation of the ban,” said FTA Director General Khaled Ali Al Bustani.

    “It also comes in response to the concerns expressed by stakeholders in the tobacco sector and their requests for such an extension that would allow them to sort out any issues resulting from the current difficult circumstances and the necessary precautionary measures that were enforced to prevent the spread of the novel coronavirus.”

    Emirati authorities have implemented strict precautionary measures to curb the spread of Covid-19, including temporarily closing cafes and restaurants and banning them from serving waterpipes.

  • A Holistic Approach

    A Holistic Approach

    Christian Swan

    PMI’s Impact project attempts to fight illicit cigarette trade by bringing together stakeholders from different backgrounds.

    By Stefanie Rossel

    One of the many side effects of globalization is the continuous rise of illicit trade. Smuggling, counterfeiting and tax evasion account for an estimated loss of $2.2 trillion, or almost 3 percent, of the world’s economy each year. The World Economic Forum (WEF) has worked out an interesting equation: If illicit trade were a country, its economy would be larger than that of Brazil, Italy and Canada. With an estimated 600 billion cigarettes worldwide being commercialized illegally each year, the tobacco industry is affected too; one in ten cigarettes is sold illicitly. According to data from the Organization for Economic Cooperation and Development, illicit tobacco trade accounts for $40 billion in lost revenue annually.

    Transnational criminal networks profit from illegal trade in virtually any product imaginable. In addition to cigarettes, they deal in drugs, fake pharmaceuticals, endangered wildlife species and even humans. Illicit trade thus negatively impacts economic stability, public health and safety and serves to finance criminality and terrorism.

    It’s a threat that affects developing and developed countries alike, albeit at varying degrees, and that governments have widely acknowledged as such. Twenty intergovernmental organizations currently deal with the problem, largely by sector or subject, the WEF reports. To efficiently address the interconnected, global nature of illicit trade, though, experts agree that a joint international, cross-sectoral approach is required.

    Such an approach is the idea behind Philip Morris International’s (PMI) Impact project, which the company launched in 2016. “Illegal trade goes beyond any specific country, region or industry,” says Christian Swan, director of illicit trade prevention and coordinator of PMI Impact at PMI. “Its various forms—ranging from tobacco smuggling and the counterfeiting of pharmaceuticals and electronics to trade in drugs, arms and even human trafficking—are inevitably interlinked as the criminal networks behind these activities exploit the same trafficking routes and corrupt networks. We firmly believe that an inclusive approach that addresses this complex problem from multiple aspects and enhances collaboration and dialogue among impacted stakeholders is essential if we want to achieve meaningful progress against illegal trade.”

    The global initiative, which is not limited to the illicit trade of cigarettes, supplements the company’s ongoing anti-illicit trade efforts, according to Swan, and stems from the realization that to make real progress against illegal trade, an inclusive approach for governments, the private sector and civil society was needed to work together to address the issue in its entirety—across a range of illegally traded goods and by tackling related crimes such as money laundering and organized crime. PMI Impact funds third-party projects against illegal trade and related crimes, covering a wide range of activities including research, training programs for law enforcement agencies, awareness raising initiatives, the development of technological solutions and the funding of equipment to help combat crime and communication initiatives to foster cross-sector and public-private collaboration.

    “Importantly, the projects supported from PMI Impact tackle illegal trade in its many forms,” says Swan.

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    Making progress

    When PMI started its initiative, it initially committed $100 million. “PMI Impact is the first corporate initiative of its kind, and we are proud of the progress it has achieved to date,” says Swan. “Under the first two funding rounds, the initiative has allocated a total of $48 million to fund 60 projects in 30 countries. Our aspiration for PMI Impact has been to create a platform for groundbreaking ideas, engaging dialogue and progressive initiatives against illegal trade and related crimes, and we have been delighted to see this vision come to life.”

    The projects come from organizations covering a broad range of public, private and academic sectors including think tanks, research institutions, universities and law enforcement authorities. According to Swan, establishing a network between these sectors is more valuable than any individual project.

    To select suitable projects, a council of independent experts with profound knowledge in the fields of law, anti-corruption, human rights and technology was installed with an open and defined evaluation process. Projects funded so far include, for instance, the strengthening of the criminal justice response to illicit trade in southeastern Europe on the basis of a comprehensive understanding of local vulnerabilities in their regional context, an analysis of attitudes and behaviors that motivate consumers to buy counterfeit goods and the effectiveness of alternative strategies to combat illicit trade, and the creation of a digital platform to identify and track critical processes and produce relevant intelligence in the context of illegal trade.

    “Overall, the innovative thinking and expertise that the grantees have put forward are a valuable addition to the global efforts against illegal trade, and the 2019 PMI Impact Report details the progress achieved by each of the funded projects individually,” Swan says. “Particularly in today’s hyper-connected world—with growing concerns around global security, the proliferation of criminal organizations and the surge of new digital tools—it’s more important than ever for public and private actors as well as civil society to take a common-sense and collaborative approach to accelerate progress against illegal trade and related crimes.”

    According to Swan, the grantees retain full independence in the implementation of their projects, including in deciding how to best communicate the results of their work and share best practices. “For example, some of the grantees have presented their projects and results in public forums, to media and [to] other stakeholders. From our side, we strive to create opportunities for PMI Impact grantees to come together and share their perspectives, learn from each other and engage with other experts and leaders working around the world to address illegal trade. We have supported such public events in several locations throughout the years.”

    Wanted: new projects

    Despite its setup, critics have complained that projects financially supported by tobacco companies cannot be objective. That same argument also contributed to the end in 2016 of an anti-illicit trade agreement between cigarette manufacturers (including PMI) and the EU. “We understand some may be skeptical, and we invite constructive feedback and dialogue—even with those who disagree with us,” says Swan. “To that end—transparency is key for us. The initiative’s application terms and selection rules are publicly available on the PMI Impact website, we publicize the results of each funding round and we have also recently launched the first report detailing each funded project.”

    Swan encourages everyone with an interest in eliminating illegal trade to review the initiative and the opportunities it creates for progress in this global issue and invites any organization interested in applying to visit the PMI Impact website for more information.

    “Eliminating illicit tobacco trade has been a long-standing priority for PMI and is an integral part of the large-scale business transformation we are undergoing to deliver a smoke-free future,” says Swan. “Illicit trade makes cheap, unregulated tobacco products easily accessible—undermining efforts to reduce smoking prevalence and protect youth from smoking. It is clear that, in order to replace cigarettes with better alternatives for millions of men and women who would otherwise continue to smoke, we must also ensure that there are no illegal actors sustaining a black market for cigarettes. To that end, we continue to invest significantly in supply chain controls through preventive and protective measures and work with law enforcement and other stakeholders to promote strong action against illegal networks.”

    Stefanie Rossel is Tobacco Reporter’s editorial contributor. An experienced trade journalist, she combines sharp reporting skills with in-depth knowledge of the tobacco and vapor industries. Prior to joining Tobacco Reporter, Stefanie was editor-in-chief at Tobacco Journal International, where she worked for a decade. Fluent in English, German and French, Stefanie covers tobacco news around the world. She is based in Germany.
  • Committed to quality

    Committed to quality

    The EDAPS Consortium continues to live up to its Golden Leaf Award in the BMJ most committed to quality category.

    By Brandy Brinson

    After the Ukraine-based EDAPS Consortium won its Golden Leaf Award last year (See “And the winners are…,” Tobacco Reporter, December 2010), the company said it was ready to prove the quality of its products and solutions on new international markets, and that the award would encourage it to continue raising the bar for excellence in both the quality and security of its solutions for the tobacco industry. And indeed, since last November, EDAPS has been busy innovating to secure the collection of excise duties on tobacco products and protect against counterfeiting.

    Formed in 2004, the EDAPS Consortium is a global group of high-tech companies that possesses its own world-level scientific base and a highly technological production and service network. It says it is the only group in the world with in-house capabilities to produce and implement the most highly secure identification documents and corresponding electronic systems.

    Having implemented more than 300 major projects, EDAPS combines unrivalled expertise in securing documents and products by using unique proprietary technologies in the fields of lasers, polycarbonate, biometrics, demetallized holograms, electronic systems and contact and contactless chips, says Nataliia Kochubey, vice president of the EDAPS Consortium.

    EDAPS has 3,245 staff members, including 110 engaged in research and development. More than $250 million has been invested to create the EDAPS production and R&D infrastructure.

    The company is led by Alexander Vassiliev, who serves as chairman of the board. Iryna Obydenko serves as president of EDAPS. She is also deputy chairman of the board of the Commercial Industrial Bank.

    Tobacco

    EDAPS became involved in the tobacco industry through developing a comprehensive solution that uses forgery-proof tax and control stamps with holographic security elements (HSE), combined with a track-and-trace information system to secure the collection of excise duties as well as to curb tax stamp counterfeiting.

    In the production of the HSEs, EDAPS’ member company, Specialized Enterprise Holography, uses state-of-the-art technologies, including electronic lithography and advanced demetallization technology. EDAPS solutions have enabled government agencies to more than double excise tax collections from cigarettes and tobacco products. EDAPS can help the tobacco industry restore revenues being lost through illicit trade.

    EDAPS says its tax stamp solution offers:

    • superior security—a robust combination of a comprehensive electronic system, encrypted information, Public Key Infrastructure, on-paper advanced security features and enhanced holograms, which makes any forgery immediately and easily recognizable;
    • a comprehensive approach—includes proven enforcement methodology that addresses human psychology, regulatory framework ensuring issuance, circulation and verification of tax stamps on tobacco products;
    • ease of use—EDAPS tax stamps are printed or applied with no waste using universally available equipment that generally forms an integral part of packaging lines, making tax stamp authenticity easily verifiable and traceable (naked eye, via the Internet and SMS).

    Kochubey says the hologram is key for developing secure tax stamps. “The secure hologram is a major overt security element that cannot be reproduced using printing techniques. The employment of secure holograms considerably undermines counterfeit risk. Moreover, visual authentication of such holograms does not require any special skills, making holograms a reliable and convenient tool for prompt product authentication by both experts and ordinary customers, which similar holograms widely implemented in Euro banknotes testify to.”

    Tax stamps include:

    • Highly enhanced and holography-based security elements
    • Advanced security printing features
    • Unique number
    • Secure barcode technology
    • Options of low/no cost—sizable economic benefit.

    Along with HSEs, the EDAPS tax stamp embraces a wide range of security printing technologies: antiscanner background grids, pseudo-embossed images, micrographics, microtext, elements printed with visible and invisible UV inks, thermochromic ink and other security features. In addition, the tax stamp number is printed in special ink that changes its color when it is permeated through the entire layer of the stamp and is clearly visible on both sides.

    New products

    EDAPS recently developed a track-and-trace system that facilitates the monitoring of excise duty revenues, stems illicit trade and promotes legitimate trade of excisable products.

    A distinctive and efficient security feature of a tax stamp is its individual serial number that is a combination of a regional and a unique multidigit code. This unique integrated code-facilitating track and trace of tax stamps throughout the supply chain is generated by the sophisticated database system.

    The track and trace system offers:

    • Tracking of the amount and origin of excisable products throughout the supply chain (from the production line to the point of sale, including options for aggregation assessment).
    • On-line and real-time reporting and accounting that reflects data on excisable products/tax stamps/tax revenues.
    • State-of-the-art and highly reliable data exchange technologies
    • Time and cost-effective solution.

     

    The track-and-trace system’s specificities of authentication include:

    • Naked eye: overt secure features not requiring the application of a special tool, skill or knowledge
    • Digital: serial number or barcode verification via the Internet, phone or SMS
    • Expert: extremely user-friendly detectors for performing forensic authentication

    Competitive edge

    Compared with its competitors, EDAPS says it is the only enterprise in the world that has in-house facilities and production lines for the issuance of tax stamps with HSEs. It also has a state-of-the-art database and verification technology as well as profound experience in addressing administrative and enforcement issues.

    EDAPS has acknowledged experience in rendering expertise and production capacity to automate the revenue tax collection system enhanced with high-security elements. A vital aspect that EDAPS has introduced into the revenue tax collection system is the possibility to deliver tax stamps, accompanying systems and services to ensure technically competent expertise, and software programming and project management, as well as to provide production machinery and tools, if required, and to offer training courses, which in fact represents a true turn-key solution.

    The EDAPS technology has a sound track record: One designed and implemented system promptly doubled excise tax collections. For three years from the project implementation date additional tax collections have reached almost $5 billion, which exceeds the amount annually collected through the traditionally applied tax stamp system.

    “Recovering billions of dollars in lost tobacco taxes has become possible only owing to a radically innovative approach of EDAPS—a comprehensive solution which integrates forgery-proof tax stamps incorporating various high-security elements into the robust automated tax control system,” says Kochubey.

    EDAPS has successfully implemented nationwide projects in Ukraine, with a population of 45 million, and in Kenya, with 39 million citizens. Since 2002, the EDAPS’ member-enterprise SE Holography has rendered technical support for the tobacco tax stamp control system supplied to the Ukrainian Ministry of Finance. Its efficiency was proven by 50 billion collections from tax duties. This system includes the issuance of tax stamps, the creation and administration of the system database, further maintenance and elaboration of enforcement methodology and technology. Consequently, Ukraine has decreased the spread of counterfeit tobacco products and raised the amount of excise revenues. As compared with 2008, the excise collections in 2009 grew by $400 million—an increase of 80 percent.

    The quality of the products and the experience of EDAPS on highly secure ID documents and IT systems have been recognized by organizations such as the ICAO, OSCE and Interpol as some of the best in the world. The EDAPS-produced De Beers Diamond Passport provides for the first time a forgery-proof certification of De Beers diamonds and jewelry items.

    Future devices

    There are many challenges to overcome moving ahead with security. Andriy Tymoshenko, director of production of SE Holograpy, says the global spread of holographic technologies seriously diminished faith in their reliability. “Massive production of counterfeited holographic security features in the Far East and Asia creates numerous problems in brand protection and document security. Thus it is necessary to look for other optical phenomena to create distinctive and easily recognizable features.” Looking ahead, she says the latest achievements in nanotechnology and materials science offer enough ideas to move forward.

    There is now a global trend to use more and more complex technological solutions in the development of security devices. Tymoshenko says, “This has to be not a simple aggregation of different proven solutions but creation of new products where components of different physical natures interact with each other. The most promising approach is the combination of RFID tags and diffractive optical elements. In this case the RFID antenna may be an integral part of the optical security feature.”