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A New Collective Voice For The Tax Stamp Industry

22 February 2016

Juan Yañez, Thomas Greg & Sons de Colombia, and newly appointed Chair of the International Tax Stamp Association (ITSA) explains the role and responsibilities of the newly created organisation.

Over recent years a range of fiscal, socio-economic and anti-counterfeiting factors have led to the proliferation of excise tax stamp programmes around the world.

The focus of these efforts has been the development and deployment of innovative tax stamp technologies and systems capable of increasing government revenues and, at the same time in many cases, provide effective barriers to counterfeit products and illicit trade.

In many respects tax stamps have a unique role. Their original and primary role remains as an excise security issued by the government, treasury or finance ministry of a country or state to confirm that duty on ‘excisable’ goods has been paid by the manufacturer and/or consumer.

However, the modern tax stamp is also being increasingly used to curb illegal trade in products for which an excise duty is payable, thereby helping to avoid money laundering.

It does this by incorporating ‘track and trace’ elements and by providing a mark of verification or authenticity, not only to demonstrate that the product itself is genuine but also that the trade channels used in its distribution are legitimate. Also, by being positioned over the opening of a tobacco package or alcohol bottle, tax stamps can also act as an anti-tampering/anti-reuse seal.

A global industry

Among this myriad of roles and applications for tax stamps, the global challenges are continually growing. For example, the deteriorating global economic environment means that the effective enforcement of excise duty rules to maximise the recovery of tax revenues has become critical for governments to enable them to finance national spending plans.

At the same time, the introduction of a global marketplace and international brands has encouraged counterfeiting to become one of the fastest growing economic crimes of modern times. In particular, high value goods on which excise duties should be paid are a particular target, with the ever increasing illicit trade in tobacco and wines and spirits costing manufacturers and national treasuries huge sums of lost revenue each year.

Of course excise duties on some products are high in part because, as well as raising tax revenues, governments have wanted to discourage smoking, drinking and driving. It follows that illicit trade in these products therefore not only deprives governments of tax revenues, but can also have an impact on important public health issues.

In the face of such challenges, the tax stamp sector is continuously evolving.

Over 250 revenue agencies at both national and state levels now use tax stamps as their method of collecting excise duty, with a combined requirement for over 140 billion stamps annually.

As the applications for excise taxes have grown, so has the value of the stamps representing them, and this, in turn, has made it more worthwhile for criminals to produce counterfeit stamps for the purpose of disguising illicit, untaxed product.

As a result, tax stamps need to be secure enough to combat the criminals who try to smuggle, counterfeit, re-fill and otherwise find ways to avoid paying the taxes. This phenomenon has led to the need for stamps to carry robust, visible security features – much like those on a banknote – to distinguish them from fake stamps.

Another driver of the evolution in tax stamps involves the breakthroughs in data processing capabilities and mobile communications, which 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.

In response to these challenges a specialist industry has developed to supply tax stamps and this has led to the introduction of a variety of technologies and methods of issuance, as well as differences in tracking, control and collection processes.

Clearly as the industry has grown and become more complex, we have now reached a stage where everyone involved - suppliers, product manufacturers, revenue agencies and enforcement organisations - would clearly benefit from a collective understanding and approach.

In addition, everyone would benefit from the generic promotion of tax stamps through education, media and lobbying programmes – encouraging wider understanding and focusing in particular on the need for holistic solutions, be they based on physical or digital stamps.

Overall there is therefore an obvious need for authoritative information on tax stamps to be more easily available and more readily communicated to those who need it.

A standard approach

This situation became particularly apparent with the formation of a new ISO Working Group to create a new standard for tax stamps.

The normal vehicle for funding such working groups is via industry associations, which represent the collective view of their members. However, in the absence of such a body for the tax stamp association, at the first meeting to define the scope of the new standard, representation was provided by a number of individual tax stamp producers – something of an anomaly for standard-writing procedures which was pointed out at that meeting.

This situation provided the catalyst for change within the industry and as a result, a number of producers at that initial meeting have taken the initiative to push ahead with creating a formal body to represent their views.

The International Tax Stamp Association (ITSA) has therefore been created to provide a broad advocacy role for the tax stamp sector. It will bring together and represent the industry producing tax stamps, but it will do this without differentiating between technologies and methods of issuance, control and collection.

Currently comprising 15 leading companies in document and product authentication and traceability,  the not for profit organisation is now formally open for membership from legally incorporated companies and businesses that supply tax stamp components and features, as well as finished tax stamps, equipment for stamp design, manufacture, application and authentication, and systems for coding and marking stamps.

Initially, with the development of a standard (ISO19998) for tax stamps already underway, the priority is for ITSA to engage and actively contribute to the drafting process.

The standard itself will be a significant step for the sector and to improve the overall quality of tax stamps in use and thus their effectiveness as a collection and criminal-fighting tool. By providing guidance on the content, security and issuance of tax stamps (whether physical or digital) it is intended to facilitate adoption of effective tax stamps by revenue agencies.


However, moving forward, the new trade association will also have a much broader role in helping to ensure a better understanding of the benefits of tax stamps and tax stamp technology, and to promote high professional standards through education, research and advocacy.

In fulfilling this role it will also seek to develop and promote best practice by providing a collective voice for all those involved in the industry at a time when the sector faces some unique challenges. Details at www.tax-stamps.org

ENDS

Note to editors

The newly established International Tax Stamp Association (ITSA) has been founded by a number of leading industry companies and stakeholders to ensure the better understanding of the benefits of tax stamp technology and to promote the highest professional standards within the sector. To this end, one of the key objectives of ITSA is to support and promote the introduction of the ISO 19998 standard for tax stamps.

The ten founder companies of ITSA - global leaders in document and product authentication and traceability - are Advanced Track and Trace, Ashton Potter Security Printers, Chanwanich Security Printing, Holoflex, Holostik India, Manipal Technologies, OpSec Security, SICPA, Surys (formerly Hologram Industries), Thomas Greg & Sons de Colombia. Since the beginning of 2016, five additional members have now joined ITSA: Allexis, AM-PG Group, Jura, Luminescence, Rolland Enterprises.

Issued on behalf: The International Tax Stamp Association. Contact Nicola Sudan on +27 21 911 0170 or nicola@reconnaissance-intl.com

Media enquiries: Andy Bruce or Ian Watson, MHW PR Ltd. Tel. +44 191 233 1300 or email andy@mhwpr.co.uk or ian@mhwpr.co.uk

Juan Yañez, newly appointed Chair of the International Tax Stamp Association, wants to promote best practice by providing a collective voice for all those involved in the industry at a time when the sector faces some unique challenges.

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