Business made ten suggestions for the proper introduction of electronic excise stamps
In February 2020, the country started the introduction of electronic excise stamps following two adopted resolutions of the Cabinet of Ministers (Resolution №74 On Some issues of Alcohol Labeling” and Resolution №97 On Amendments to the Provisions on Production, Storage, Sale of Excise Tax Stamps and Labeling of Alcoholic Beverages and Tobacco Products). At the same time, the issuance of excise stamps for businesses started in mid-May, thus a few weeks later than planned.
According to preliminary discussions, the electronic excise stamp project should be implemented in 3 stages. The first stage is already completed. It implied the possibility to order and issue new stamps. The business welcomed such as decision as it marked the transition to electronic workflows. It is worth noting that the Association took an active part in the development of this project. The second is the implementation of a pilot project to scan the excise tax stamp at the salespoints. The transparent business has a lot of questions regarding this second stage.
Thus, the Government considers introducing this year the inventory count of bottles for the alcoholic beverage business. In other words, besides the inventory of excise stamps, it is planned to establish an additional control system allegedly to strengthen the fight against counterfeiting and smuggling. This system implies the application and scanning of additional elements on the bottle to check them for legality. At the same time, this entails the need to re-equip the production line to stamp the alcoholic beverages which would cost more than $ 75 thousand. Given that importers do not have special lines for the production of alcoholic beverages directly for Ukraine, as well as the fact that some products are manufactured abroad where it is not possible to install any equipment, the requirement for additional elements on bottles would threaten the imports of alcoholic beverages and cut the budget revenues from excise tax and other payments. Moreover, businesses need to purchase scanners ($ 150-200 for 1 scanner) to scan stamps at each stage of distribution and directly before the sale. Also, there is an idea to triple the value of the excise stamp to make it more difficult to counterfeit (currently the stamp costs 19 kopecks, the proposed cost is more than 60 kopecks). At the same time, experience shows that any stamps can be counterfeited.
According to business, this proposal will impose an additional financial burden on legal business while it cannot de-shadow the market as a mechanism to combat illegal practices is not provided. Therefore, the community does not support the introduction of the automated system of control over the circulation of each bottle of alcoholic beverage at all stages of its movement, as well as applying any additional control elements directly to the bottle beside the excise tax stamps.
In this context, the business made 10 proposals for the proper introduction of the electronic excise stamp system which would not harm importers.
Thus, circulation control systems for alcoholic beverages and tobacco products should be separate. Any changes in excise tax stamps must take effect no earlier than 24 months from the date of publication of the legal act approving the new models of excise tax stamps to enable businesses to adapt all processes to new conditions. When issuing excise tax stamps, it is more appropriate to impose the obligation to enter data on such stamps for each buyer in the inventory accounting system system of the State Tax Service of Ukraine (which has all the initial data), and not on the importer/producer of alcohol. The deadline for issuing excise tax stamps should be reduced to 1 month from the date the State Tax Service of Ukraine (currently 2 months) receives the preliminary application-invoice for excise tax stamps, as well as consider the option of applying stamps in Ukraine.
The value of the paper excise tax stamp should not be higher than that in force today, as the stamp itself proves the payment of the excise tax, and therefore should not create an additional financial burden on the taxpayer, except when a more expensive material such as stickers are used. The business also proposes to consider eliminating the need to mark containers of 0.05 liters with excise tax stamps because foreign manufacturers do not have mechanized lines to stamp such bottles, so the stamping of excise stamps is done manually, which creates additional costs for importers. At the same time, it is necessary to cancel the Journal of issued excise tax stamps because the information contained in it is duplicated in other electronic databases, to which the State Tax Service of Ukraine has access. Also, the businesses should be exempted from the need to report on the volume of exports and imports of alcoholic beverages as licenses for import and export of such products were canceled (the report form still contains the details of the license). It is also relevant to enable the payment of excise tax in advance before importing goods into the territory Ukraine (for example, to introduce payment at customs clearance).
The business also proposes to consider the abolition of excise tax stamps for alcoholic beverages in the future, as control over the circulation of excisable goods can be provided by more modern means, for example, through the introduction of an automated system that exists in the EU.
Therefore, the European Business Association appeals to the Ministry of Finance of Ukraine and the State Tax Service of Ukraine not to introduce a system of scanning each bottle at all stages of distribution as it does not help combat the shadow market, but create an additional burden on transparent business. Also, the business proposes to consider 10 proposals to properly complete the electronic excise stamp project and obtain a truly high-quality and effective control system. We do hope the voice of business will be heard!