How One Country Increased Excise Tax Collection

Case Study – Tax Stamp

How One Country Increased Excise Tax Collection

The Issue

A large West African nation was losing tax revenue due to under reporting of production volumes and product smuggling. Tax receipt collection did not match the consumption numbers for tobacco, spirits, beer, soda and bottled water.

The revenue agency was hampered by a number of issues – the inability to confirm that appropriate taxes had been paid on the consumer goods, the presence of contraband which was displacing taxable sales, and the lack of binding legislation to allow for proper enforcement.

The Solution

Authentix designed an excise tax program for the revenue agency while providing guidance and assistance on drafting the required legislation.

Multi-level stamp security features were developed including anti-copy elements, overt features for the public, machine-readable features for inspectors with hand-held devices and a forensic feature that requires laboratory analysis and supports enforcement actions.  Cost considerations drove decisions on stamp designs, including tax rate, product type and application method.

As numerous parties are involved in the tax stamp acquisition process – multiple manufacturers of each consumer product, the stamp printer, the revenue agency and the Authentix program management organization – a secure and simple process using the Internet-based Authentix Tax Stamp Information System and its e-commerce module was implemented.

The Results

The excise tax stamp program has been adopted and rolled out by compliant manufacturers. It is expected that US$ 25 million in additional tax revenue will be delivered to the revenue agency annually.