Tax stamps: Sowing the seeds of authentication success
Oct. 9, 2017
The illicit trade of products, through tax evasion, smuggling and counterfeiting, costs treasuries billions of dollars a year in lost revenue. And the cost is not just a financial one. The damage caused by counterfeiting to a company’s brand reputation, loss of sales and market capitalisation is almost incalculable.
So, the use of tax stamps not only ensures that tax payment records can be kept but also provides assurance that the products they are affixed to are genuine. Research suggests that tax stamps currently make up a significant share of the security print market with billions issued annually for cigarettes and alcohol alone, making them part of the largest sub-sector of the security print market and ahead of banknotes in terms of the volume of printed documents.
The technology has evolved into an accepted and effective authentication device, regularly specified in government tenders and commercial bidding opportunities. Today, there is no better opportunity for authorities to act decisively to boost excise revenue from growing sales than by using tax stamps as an integral part of their frontline protection and security strategies.
Billions of stamps, in the form of securely affixed labels, are issued every year by over 150 provincial and national revenue agencies around the world, indicating that governments and agencies see the value of using them as central features in effective revenue gathering strategies.
Modern tax stamps are also finding increasing usage as effective frontline security devices in track and trace strategies to combat different forms of illicit trade. In this role, they can be integrated with enforcement programmes and supply chains to tackle smuggling channels and once implemented on tobacco and alcohol, potentially extended to a range of other products exposed to similar risks.
Indeed, the role of tax stamps has been further recognised by the United Nations in a report that acknowledged their evolution to meet new product protection and security needs as well as the paramount role they play in securing excise revenues for national authorities and protection agencies. The report signalled that ‘governments are cooperating with suppliers of anti-counterfeiting technologies, who are providing them with increasingly sophisticated tax stamp systems’ – a recognition of the trend towards utilising tax stamps as instruments for product track and trace rather than as simply tools for tax collection only.
Early 2018 will also see the introduction of a new international tax stamp standard in a move broadly welcomed by many in the sector and supported by ITSA. The standard comes against a global backdrop in which some countries or regional states have stamp programmes for collecting tax, while other parts of the world have no programmes.
This is driving the requirement towards ISO 22382 for the specification of tax stamps – a unifying initiative that will bring all countries using stamps, and encourage those not using them, to have programmes that are in line with the best and most effective on the market.
The expanding applications for tax stamps, and the growing role they can play in interoperable traceability and authentication applications, can be seen in the agriculture sector. There, for example, a fiscal stamp issued by the National Seeds Institute of Argentina (INASE), a government organisation responsible for certifying the quality and identity of seeds sold to Argentine farmers, aims to promote safety throughout the Argentine seed industry by protecting farmers from fake seeds and facilitating traceability.
The stamps are currently a mandatory requirement on certified hybrid soybean seeds – each bag of seeds must carry a secure label with a QR code (with anti-copy protection features), along with a unique serial number and physical security features. Together, these elements enable both traceability and authenticity of the seeds, identifying which producer they are from, the type of seeds contained within the bag and whether relevant duties have been paid.
It’s important to INASE that the solution is not only a cost effective one but is also an acceptable one. The initiative allows inspectors to securely authenticate seeds in various environments, including remote locations, while giving them access to real-time traceability information via a smartphone.
They are equipped with customised apps for their mobile phones that can authenticate the QR codes in real-time as part of the authentication process. Every scan made by inspectors is geo-located, stored in a secure database and accessible via an online dashboard. If a scan indicates a counterfeit or highlights other issues, an alert can be automatically sent to authorised inspectors and authorities.
If tax stamps can provide an effective solution for excise collection, product authentication and secure track and trace, then there’s no reason why the technology and the advantages it offers, should not continue to succeed and seek out ever widening applications.
ITSA was founded by several leading industry companies and stakeholders to ensure the better understanding of the benefits of tax stamp programmes and to promote the highest professional standards within the sector. To this end, one of its key objectives is to support and promote the introduction of the ISO 22382 standard for tax stamps. Members are Advanced Track and Trace, Allexis, Ashton Potter Security Printers, Chanwanich Security Printing, Holoflex, Holostik, Jura JSP, KBA-NotaSys, Leonhard Kurz, Madras Security Printers, Manipal Technologies, OpSec Security, Rolland Enterprises, SICPA, SURYS, Thomas Greg & Sons, and Uflex.