Ukraine uses EDAPS Tax Stamp System to control illicit sales of tobacco products

Mar 31 2010

The most recent edition of the authoritative Tobacco Atlas, released by the American Cancer Society and World Lung Foundation, ranks nations on their success in combating illegal sales of cigarettes and tobacco products. The report confirms that the Ukraine, with a population of 45 million people and despite porous borders, has the extremely low rate of 1.7% of its total market in contraband tobacco. The Ukraine utilizes the EDAPS Tax Stamp System to control the illicit sales of products.

The Ukraine rate of 1.7% is 8 times better than the results in Switzerland, 7.5 times better than the UK, 15 times better than Italy, 3.5 times better than the United States, 20 times better than Brazil, 23 times better than Greece, 15 times better than Malaysia, 8 times better than Turkey, 46 times better than Iran and 13 times better than neighboring Russia.

The 2009 edition of the Atlas concludes: "Cigarettes are the world's most widely smuggled legal consumer product. In 2006, about 600 billion smuggled cigarettes made it to the market, representing an enormous missed tax opportunity for governments, as well as a missed opportunity to prevent many people from starting to smoke and encourage others to quit."

In the years studied, one of the largest areas of trade in illegal cigarettes was Eastern and Central Europe as show by 607 seizures of 100,000 or more counterfeit cigarettes. In the Commonwealth of Independent States, 20 percent of all cigarettes consumed – some 100 billion – were illicit. Yet among 196 nations studied, the Ukraine has one of the lowest percentages of illicit cigarettes consumed.

The well-established EDAPS Tax Stamp System utilized by the Ukraine has resulted in more than doubling the legitimate sale of tobacco, alcohol and other products, and has resulted in billions of dollars in savings for that nation. By comparison, tax stamp systems deployed in other nations have resulted in annual tobacco tax losses: USA – $5 billion, Canada – $2.4 billion, UK – pounds Sterling 4.5 billion, Germany – $7.2 billion, Malaysia – 0.6 billion.

"By combining state of the art holograms with our enforcement methodology and Track & Trace System, we are enabling government agencies to substantially increase their revenues from the sales of excisable products while shutting down illegal uses that often fund transnational criminal and terrorist activities," said Alexander Vassiliev, Chairman of EDAPS.

The Secretary General of the prestigious World Customs Organization has previously singled out the Ukrainian system of protecting goods with tax stamps with holographic security elements developed by EDAPS. "This system is a good example for other states," said Michel Danet at a Global Congress on Combating Counterfeiting & Piracy.

"The key role of our organization is to provide reference information and inform government institutions of the methods of protecting goods from counterfeiting. These methods become more complicated while shadow market dealers develop new methods of counterfeiting not only products, but security elements as well," the Secretary General concluded.

EDAPS offers Digital Tax Stamps but with overt security (such as holograms). Digital Tax Verification systems from other vendors are easily imitated - relying on a number (printed as a 2D barcode and/or a human-readable number to be verified on-line or by phone). A counterfeiter can print a similar tracking number, provide a false toll-free phone number & website, so an inquiry sent there will yield responses required by the counterfeiter. In the absence of a comprehensive enforcement methodology, overt security and due to the fact that very few will bother to call or check on-line the cigarette pack number, digital tax verification from other vendors has not delivered any significant results anywhere in the world. A comprehensive solution by EDAPS has a proven track-record of overcoming these obstacles and generating billions of dollars in additional tax revenue.

Challenging economic conditions around the world have motivated many nations to review their tax stamp operations in an effort to hold back losses and convert to a solid profit picture.