Digital stamps to combat illicit tobacco trade, boost tax revenue
Published: 02:02 PM,Feb 07,2022 | EDITED : 11:02 PM,Feb 07,2022
Track and trace: Pact signed by the Omani Tax Authority last week will pave for the way for the rollout of a sophisticated platform, complete with foolproof digital stamps, and tracking and authentication tools to sift illicit goods from genuine products
The Sultanate of Oman is set to join its GCC peers, among other leading nations around the world, in introducing digital tax stamps to help fight the illegal import of counterfeit cigarettes, tobacco products and other excisable goods —the clandestine distribution and sale not only has potential health consequences for consumers, but also deprives the government of excise tax revenues.
An agreement signed last week by the Omani Tax Authority with British-based De La Rue, a leading global provider of banknote printing and authentication solutions for excisable goods, will pave for the way for the rollout of a sophisticated platform, complete with foolproof digital stamps, and tracking and authentication tools to sift illicit goods from genuine products. By enabling the comprehensive tracking and verification of excisable goods imported and sold in the country, the Tax Authority aims to optimise revenue collection from excisable goods.
The Sultanate of Oman currently imposes an excise tax ranging from 50 to 100 per cent on cigarettes and tobacco products, alcohols and spirits, carbonated and energy drinks, and pork products — a levy that first came into force around mid-June 2019. The list was enlarged in October 2020 to include a wide range of sugar-sweetened drinks, canned juices and other ready-to-drink beverages.
Together with Value Added Tax and other changes to existing tax tariffs, they have helped shore up tax-based revenues accruing to the Omani government, thereby mitigating the dramatic decline in hydrocarbon export revenues witnessed following the recent global oil collapse and the pandemic.
De La Rue says its Digital Tax Stamp solution contracted by the Tax Authority will be implemented over a five-year timeframe, starting with its application to cigarettes and tobacco products. The solution will involve the use of secure printed tax stamps and digital tracking tools in accordance with guidelines prescribed the World Health Organisation’s (WHO) Framework Convention for Tobacco Control (FCTC).
“Tax stamps provide governments with a way to mark their excisable products, ensuring the correct tax has been paid and to enable the validation and authentication of these products as genuine. The design of the tax stamp is achieved via a sophisticated layering of highly secure print features combining specific overt, covert and forensic elements, bespoke to each country’s requirements,” De La Rue explained.
Citing figures published by the World Bank, the British firm warned that global economies lose between $40-50 billion annually from tobacco alone through illicit trade. The World Economic Forum estimates the value of the global illicit trade at a staggering $2.2 trillion annually — an industry that enriches criminal organisations, undermines revenue collections, damages legitimate businesses and harms consumers.
In the Sultanate of Oman, increasingly innovative and rampant attempts to smuggle contraband cigarettes and other tobacco products by road and sea have prompted Omani authorities to strengthen surveillance, detection and interdiction efforts.
Significantly, with the signing of last week’s contract, all six of the Gulf Cooperation Council (GCC) states are now part of a unified, FCTC-compliant, digital tax stamp solution provided by De La Rue. The entire tax framework around Excise Tax (also known as selective tax) had been broadly coordinated and agreed by the GCC states in a joint effort to bolster non-oil revenues.
The Sultanate of Oman is set to join its GCC peers, among other leading nations around the world, in introducing digital tax stamps to help fight the illegal import of counterfeit cigarettes, tobacco products and other excisable goods —the clandestine distribution and sale not only has potential health consequences for consumers, but also deprives the government of excise tax revenues.
An agreement signed last week by the Omani Tax Authority with British-based De La Rue, a leading global provider of banknote printing and authentication solutions for excisable goods, will pave for the way for the rollout of a sophisticated platform, complete with foolproof digital stamps, and tracking and authentication tools to sift illicit goods from genuine products. By enabling the comprehensive tracking and verification of excisable goods imported and sold in the country, the Tax Authority aims to optimise revenue collection from excisable goods.
The Sultanate of Oman currently imposes an excise tax ranging from 50 to 100 per cent on cigarettes and tobacco products, alcohols and spirits, carbonated and energy drinks, and pork products — a levy that first came into force around mid-June 2019. The list was enlarged in October 2020 to include a wide range of sugar-sweetened drinks, canned juices and other ready-to-drink beverages.
Together with Value Added Tax and other changes to existing tax tariffs, they have helped shore up tax-based revenues accruing to the Omani government, thereby mitigating the dramatic decline in hydrocarbon export revenues witnessed following the recent global oil collapse and the pandemic.
De La Rue says its Digital Tax Stamp solution contracted by the Tax Authority will be implemented over a five-year timeframe, starting with its application to cigarettes and tobacco products. The solution will involve the use of secure printed tax stamps and digital tracking tools in accordance with guidelines prescribed the World Health Organisation’s (WHO) Framework Convention for Tobacco Control (FCTC).
“Tax stamps provide governments with a way to mark their excisable products, ensuring the correct tax has been paid and to enable the validation and authentication of these products as genuine. The design of the tax stamp is achieved via a sophisticated layering of highly secure print features combining specific overt, covert and forensic elements, bespoke to each country’s requirements,” De La Rue explained.
Citing figures published by the World Bank, the British firm warned that global economies lose between $40-50 billion annually from tobacco alone through illicit trade. The World Economic Forum estimates the value of the global illicit trade at a staggering $2.2 trillion annually — an industry that enriches criminal organisations, undermines revenue collections, damages legitimate businesses and harms consumers.
In the Sultanate of Oman, increasingly innovative and rampant attempts to smuggle contraband cigarettes and other tobacco products by road and sea have prompted Omani authorities to strengthen surveillance, detection and interdiction efforts.
Significantly, with the signing of last week’s contract, all six of the Gulf Cooperation Council (GCC) states are now part of a unified, FCTC-compliant, digital tax stamp solution provided by De La Rue. The entire tax framework around Excise Tax (also known as selective tax) had been broadly coordinated and agreed by the GCC states in a joint effort to bolster non-oil revenues.