วันพฤหัสบดีที่ 9 กรกฎาคม พ.ศ. 2563

Excise stamps- who should pay for proof of duty paid? Dr. Nadtara Bott


Excise stamps- who should pay for proof of duty paid?

Dr. Nadtara Bott
Krisdika Officer, 
Office of the Council of State

          There is nothing certain in life, except for death… and tax.

          Anyone who has ever purchased a product subject to excise duty in Thailand will have seen a quaint strip of paper over the lids of alcohol bottles, or one attached to the opening of a cigarette packet. Personally, I find these intriguing and reminiscent of a bygone era of imperialist bureaucracy. I viewed them as a sign of legitimacy, and a guarantee of the authenticity of the product. That was my view until I learned that the Thai Government is due to incinerate 27 million Baht’s worth of these stamps in their plan to reform the existing excise stamp system and replace them with a new design. Surely, this shouldn’t be a burden on taxpayers? How do other countries approach the system of excise stamp collection?

A short history of the use and purpose of excise stamps

          The use of “stamps” or a seal to denote tax paid has existed since the dawn of civilisation. Archeologists have found ancient Egyptian artefacts originating from the time of 3000 BC in the form of ivory labels to attach to goods and at times, hieroglyph inscription on pottery containers to denote that tax had been paid.[1] The origin of tax stamps in the form of paper adhesive labels dates back to 1637 when Spain first introduced stamped paper.[2] The first and main purpose is proof of payment of tax on goods. Use of excise stamps became widespread in the 19th century as a method of streamlining bureaucratic measures.[3] In time, the second purpose of excise stamps came to be that consumers could be assured of the authenticity of the product. This second purpose became instrumental for some Governments such as those of Russia and Brazil to control and limit the existence of counterfeit goods as well as tax evasion.[4] Thirdly, an underlying purpose for excise taxation and the accompanying use of excise stamps is to provide a measure of health control to dissuade consumers from indulging in consumer goods considered bad for health.[5]

          In the 21st century, the use of physical stamps has become less common as computerization has become a more popular means of tracking excise tax payments. Tax stamps are used by regulators in approximately fifty countries globally.[6] For countries that retain their use, physical excise stamps have evolved to become more sophisticated. Use of holograms, UV- only visible ink is used to prevent counterfeiting for avoidance of tax. Anti- counterfeiting print technology such as barcodes and serial numbers have also been issued for the purpose of tracking and tracing. Data processing capabilities and mobile communications have allowed products to be marked in-line during production with their own unique codes, recorded in a database. The codes may then be used to verify the product in remote locations and provide key data on source, destination and authenticity. As an example, Spain implemented the digital management of excise stamps allowing producers and traders to “activate” and “deactivate” excise stamps remotely. Thus, use of technology such as serial numbers has given a fourth and final purpose for the use of physical stamp duty for producers of taxable goods to accurately track and predict supply chain data.

The Thai excise stamp system.

          The levy of excise tax in in Thai law is governed by the Excise Tax Act, B.E. 2560 (2017). The modern legislation consolidates all previous pieces of legislation governing excise tax on goods and services which the State deems that consumption must be controlled as such may cause damage to human health or impact the morality of the people. This includes such obvious goods such as alcohol and tobacco, as well as less obvious goods such as playing cards, and also non-essential goods, and goods and services that receive special benefits from State businesses.[7] Section 4 defines “excise stamps” simply as “a stamp prepared or procured by the Government for use in the collection of tax under this Act”.

          The excise stamp system in Thailand is administered according to Ministerial Regulations and Rules enacted under this main legislation, and the design of the stamp is legislated by ministerial regulation, with colour – coding to identify the type of products and are equipped with a watermark and incised printing. The new Ministerial Regulations were proposed to consolidate and simplify the categorization of taxable goods, as well as to improve security features and to provide a system for tracking and tracing goods via QR code and barcodes. In practice, manufacturers of goods obtain stamps upon payment of tax and affix these Government- issued stamps on their products prior to removal from the bonded warehouse. Section 67 of the Excise Tax Act provides that “No person other than the Excise Department shall make or procure excise stamps or official tax payment marks” thus putting the onus solely on the State revenue to pay for and manufacture physical excise stamps. With the issue of the newly- designed stamps, the previous versions will, in the interest of tax collection and accountability, need to be destroyed. - All using Government funds, footed by tax payers. What about other countries? Who foots the cost of proving that tax has been paid?

Who bears the cost of producing excise stamps in other countries?

          A brief research of World Health Organisation (WHO) data[8] has found the use of paper excise stamps still prevalent in Southeast Asian countries including Cambodia[9], Indonesia[10], Lao PDR[11], Malaysia[12], Thailand and Vietnam[13]. Other countries still using physical tax stamps include Canada[14], Colombia[15], Russia[16], Turkey[17], Ukraine,[18] and Spain[19]. Out of these countries, only in Indonesia, Thailand and Vietnam does the Government solely bear of costs of manufacturing stamps. In remaining countries such as Cambodia, Lao PDR, Malaysia and Canada for example, licensed manufacturers and importers are either solely or partially responsible for the cost of excise stamps and to affix them onto their products. In recent years, the main argument for strict Government involvement in the design and issue of excise stamps is the sophistication and technology used in their design. This is to prevent the counterfeiting of stamps in avoiding the payment of tax and therefore, to ensure that the State maintains effective collection of tax revenue. Additionally, it is argued that the State should also maintain control over the manufacturing of excise stamps to prevent the counterfeiting of goods on products themselves, to protect consumers from harm.

Alternative excise stamp schemes.

The United Kingdom: Label incorporation.

          In the United Kingdom, two types of excise stamps exist by virtue of Schedule 2A of the Alcoholic Liquor Duties Act 1979 and the Duty Stamps Regulations 2006. The implementation of tax stamp technology was subject to an EU tender process and the supplier is supervised by the Her Majesty Revenue and Customs (HMRC) procurement section. A traditional stamp may be attached directly to the bottle, or alternatively, the “UK DUTY PAID” mark may be incorporated into bottle labels and printed by the industry’s own label printers. As of July 2020, the latter is found to be more prevalent in the UK market. The producers or manufacturers of payable goods register with the HM Revenue and Customs (HMRC) to receive the design and printing specifications of the excise stamp mark that is to be incorporated onto the product label. Producers and manufacturers also receive serial numbers based on the forecast of the amount of goods to be manufactured and bear the costs of both types of excise stamps.

Singapore: cigarettes

          For proof of duty paid for cigarettes, the Customs Act of 2009 of Singapore prescribes that individual sticks of duty-paid cigarette are marked with the letters “SPDC” (Singapore duty-paid cigarettes) with a ring of vertical bars underneath. Importers and manufacturers of cigarettes are required to obtain approval from Singapore Customs before importation or manufacture of new brands or variants of cigarettes meant for sale and consumption in Singapore. The costs of marking that duty has been paid is thus borne either by the manufacturers or importers.

Denmark: ‘fiscal cap’

          Excise tax stamps for wine were abolished in Denmark in 2001, with excise tax stamps for spirits to follow in 2015. Prior to this time, a traditional paper strip- type stamp was applied over the top of the lid of taxable alcohol, and an optional method was a specially stamped “fiscal cap” where manufacturers and producers, like in the United Kingdom, register with the Danish tax authority to receive the design and printing specifications of the excise stamp mark that is to be incorporated into the design of a secure cap. It was argued that in practice, the “bespoke complexities of operating the fiscal capping machinery meant that the vast majority of imported products used the paper strip version.”[20]

Conclusions for Thailand

          From a brief study of data on the usage of excise stamps, it is found that some countries have abandoned the use physical excise stamps due to a sense of antiquity, and the overburdening of manufacturing and production industries such as Denmark while others such as countries in Southeast Asia have come to revive the use of excise stamp to ensure efficient collection of payable tax, authenticity of goods and the protection of public health. Another country that has come to revive the use of excise stamps is the United Kingdom, which in 2006 introduced the stamp duty scheme for alcohol products in response to counterfeit goods, but unlike Thailand, the burden of cost of the stamps are placed on producers of taxable goods. Would it therefore, be better to let the manufacturing industry foot this cost?

          Studies on the cost- effectiveness of the use of excise stamps has shown varying conclusions.[21] In a 2018 study by Godden and Allen on the development of modern revenue controls on alcoholic beverages in 2018,[22] the use of excise tax stamps makes only a limited contribution to intended policy use goals of 1. Curbing tax avoidance and 2. Reducing the consumption of alcohol. The study concluded that the use of excise stamps should only be made alongside an efficient tax policy and regulatory enforcement framework. Additionally, in this study of 7 different countries including Denmark, Turkey, South Korea, UK, Kenya, Colombia and Morocco, the biggest concern was the costs involved that are borne by the alcoholic beverage industry itself.

          With a current lack of alternatives, it may be suggested therefore that in the case of Thailand, there is still perhaps a justification for the use of a system of excise stamps. The main reasons for this are to ensure the collection of payable tax and to maintain the State’s role in deterring the production of and policing counterfeit goods. It could be suggested that the cost of physical stamps might be shared by producers and manufacturers of taxable goods. However, there exists a concern that shifting the cost of manufacturing excise duty stamps to goods manufacturers may in turn, result in increased counterfeiting and/or shifting the burden of costs in turn to consumers. To counter this concern, if tracking technology can be incorporated into excise stamps and be shown to benefit the manufacturing industry, there could be more incentive on their part to share the costs of manufacturing excise stamps.
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[1] Blanchard, G. (2015, July 01). Detail from the Sarcophagus of AnkhnesneferibreAncient History Encyclopedia. Retrieved from https://www.ancient.eu/image/3984/, https://www.ancient.eu/Egyptian_Hieroglyphs/
[3]  Gaidar, Ye. T., ed. (2003). The Economics of Transition. Cambridge, MA: Massachusetts Institute of Technology. p. 691
[4] Iglesias RM., (2016) Increasing excise taxes in the presence of an illegal cigarette market: the 2011 Brazil tobacco tax reform. Rev Panam Salud Publica. 2016;40(4):243–9,
[5] The World Health Organization (WHO) Framework Convention for Tobacco Control (FCTC) 
[6] Oxford Economics, (2017) The Development of Modern Revenue Controls on Alcoholic Beverages
[8]WHO, Duty paid or excise stamp by country, Last updated: 2018-09-04 https://apps.who.int/gho/data/view.main.55660
[9] Cambodian Law on Customs, 2006
[10] Law of the Republic of Indonesia number 39 of 2007
[11] Lao PDR’s Tax Law of 2005
[12] Malaysia Excise Act of 1976.
[13] Excise Tax Law No. 27/2008/QH12
[14] Excise Tax Act R.S.C., 1985, c. E-15
[15] Colombia Tax Reform Law of 2019 (Law 1943 - Tax Reform)
[16] Resolution number 319 "Introduction of excise stamps in the Russian Federation".
[17] Law No. 213, Official Gazette No. 10703 dated 10.01.1961)
[18]  Ukraine's presidential decree of 18 September 1995 "On approval of the excise duty on alcoholic beverages and tobacco products", Regulation of the Ministry of Incomes and Fees of Ukraine on Excise Stamps 2013
[19] Spain: Law on Taxation of Special Products and Services, (Excise Law)
[20] Euromonitor International. (2015). The illegal alcoholic beverages market in six Latin American countries 2014. Report commissioned for SAB Miller., Doug Godden and Elizabeth (Liz) Allen,(2018) “The development of modern revenue controls on alcoholic beverages” World Customs Journal, Volume 11, Number 2, at p.7,
[21] Hedley, D. (2012), Fighting Illicit Trade in Tobacco with Technology [Web blog]. Euromonitor International. Retrieved from http://blog.euromonitor.com/2012/12/fighting- illicit-trade-in-tobacco-with-technology-does-it-work.html, Sou, G., & Preece, R. (2013). Reducing the illicit trade in tobacco products in the ASEAN Region: a review of the Protocol to Eliminate Illicit Trade in Tobacco Products. World Customs Journal, 7, pp.65-91, Retrieved from http://www.worldcustomsjournal.org/
media/wcj/-2013/2/WCJ_V7N2_Complete_Journal.pdf
[22] Doug Godden and Elizabeth (Liz) Allen,(2018) “The development of modern revenue controls on alcoholic beverages” World Customs Journal, Volume 11, Number 2

1 ความคิดเห็น:

  1. May i ask.. how does one get an excise sticker for a product that is made out from pre-purchased alcohol and where the excise duty has already been paid? Thank you. 🙏

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