Tobacco Tax Administration

Table of Contents

Tax Stamp Labels

Tax stamp labels are issued by the Revenue to collect the tax on cigarettes and fine-cut tobacco for rolling. They are applied to cigarette packets beneath the wrapper, and there are rules regarding the affixation of the stamps to the pack.

Stamps are supplied on reels and sheets for adhesion. Each is numbered sequentially with a code. A reel contains 50,000 stamps, and sheets are supplied in sequentially numbered batches containing 30,000 stamps.

The stamp has a unique design and is intended to validate the payment of excise duty in Ireland. Its code includes the stamp code of the trade, the number of cigarettes in each pack or weight, numerals denoting the retail selling price, and the indication of whether the cigarettes were home-produced or imported.

There are also codes dealing with batching and indicating the position of each stamp within the reel or batch supplied, together with security marking.

Purchase of Stamps

Tax is paid by means of the stamp, which is purchased by the manufacturer or importer. Packs of cigarettes or fine-cut tobacco for rolling of cigarettes for retail in the State must have the tax stamp affixed to denote the payment of duty.

Stamps are issued only upon payment of the amount represented by the stamp and may only be applied in a tax warehouse.

Cigarette manufacturers or importers or a representative in the State acting for a manufacturer or importer situated outside the State may purchase tax stamps. Tax stamps may be held on the site subject to Revenue control and security conditions.

Traders registering for tax stamps must apply, give full details of the proposed business, and register. They must also provide details of the brands concerned, the selling price, anticipated sales and imports, and their VAT number.

They must enter agreements with Revenue regarding control. They must set out projections of the use of stamps monthly to the control officer.

Handling Stamps

Revenues printing contractor delivers stamps to the premises directly. Deliveries are usually made monthly. Revenue controls are in place regarding deliveries and receipts. Revenue officers will compare the details of stamps received with the requisite delivery order. There are procedures in relation to receipt and custody of the stamp.

Stamps must be securely stored and be capable of being secured by the Revenue. Access must be controlled. Traders retain full responsibility for stamps delivered to their premises.

Stamps may be released from Revenue control by return of forms to Revenue. They are used on a first-in-first-out basis. If the release is abused, the Revenue may impose stricter controls and require that a control officer be in attendance.

Stamps intended for exported cigarettes may not be used on cigarettes for the domestic market.

Traders involved in manufacturing tobacco products must provide regular periodic stock checks for all stamps. Weekly stocktaking must be undertaken of stamps held outside secure stores which have not entered accounts. Checks must be made on the last day of each accounting period at the close of business on a budget day and on a day preceeding with a price rise.

Revenue Control may carry out stock checks of stamps in a secure store at the end of each accounting period. Deficiencies will be treated as releases and charged to tax.

Materials

Manufacturers must account to the Revenue Commission in respect of all materials. The Revenue may require the tax to be paid on quantities which have not been accounted for in respect of the amount of tobacco tax as might reasonably be expected to be charged on tobacco manufactured from such materials.

The receipt, manufacture and delivery of unstamped tobacco products under duty suspension are subject to Revenue conditions in warehouses.

Notice must be given to the Revenue of a proposal to dispose of the refuse. Certain details are required. Provided the refuse does not contain any consumable material, the trader may dispose of the refuse a certain period after notice of delivery unless otherwise instructed. If consumable material is included, specific instructions from Revenue are required.

Manufacturers must preserve records, books and accounts relating to the purchase, receipt, disposal and manufacture of materials for taxable products for a period of six years. Manufacturers and importers must pay the charges and costs incurred by Revenue Commissions when attending at the premises.

Payment

The accounting period for tobacco products begins on the fourth last day of each month and ends on the fifth day of the succeeding month. Deferred payment arrangements are allowed, subject to conditions in relation to stamps issued but not yet used.

In order to avail of deferred payments, a guarantee with a bank must be entered. Traders must qualify to participate in the scheme.

Traders should generally release sufficient stamps to meet production requirements during the accounting period. Where this is not possible due to lower-than-anticipated sales, reels or complete batches remaining unused following production may be returned to the secure store, and credit may be claimed.

Repayments & Credits

There is provision for the repayment of tax on tax stamps where it could be proved that the stamps have been damaged or destroyed. There are number of basis including:

the stamps have been damaged or rendered unusable while being held;
stamps on products returned by customers, where they are to be destroyed;
stamps on products damaged after production, or which are found to be unsuitable for sale, and which are destroyed;
stamps on products which are to be used as samples for quality control, experimental or research;
stamps on products that have been subject to an irregularity in another state or where tax has been paid in another state.

Repayment is allowed by means of credit.

Tax may be credited where the cigarettes or tobacco are damaged after production or returned as being out of date or unfit for sale.

Records

Traders who are subject to the tax are obliged to maintain records and accounts of:

stamps orders;
delivery of stamps to premises;
stamps issued from such storage;
stamps affixed for release for consumption;
stamps affixed but not released;
stamps in relation to which remission or repayment is allowed;
stocks of unused stamps;
amounts of products produced by brand and size;

During each accounting period, the trader must agree on the tax liability with the Revenue Control officer. Home manufacturers must provide details of cigarettes produced by brand and pack size during the period and show details of the stamps used.

Imports

Importers must show details of cigarettes imported by brand and size during the period and stamps used. A reconciliation must be undertaken to produce a tax stamp charge. Statements must be remitted to Revenue Commissioners together with a home consumption warrant for stamped products released for consumption.

The requirement to affix tax stamps to the wrapper means that cigarettes being imported will be stamped at the point of manufacture or import. If unstamped cigarettes arrive in the State, they must be held in an approved tax warehouse until the stamps have been secured and affixed.

Imports or consignments within the EU will be covered by an Administrative Accompanying Document. In the case of imports from third countries, a single administrative document is used. It must set out the price declared to the Revenue. Similar provisions exist to the above with respect to the deferment of payments and arrangements for smoking tobacco and other products.

Offences

The Finance Act 2001 sets out offences in relation to tobacco products tax. It provides that any person who offers for sale or delivery, other than under a duty-suspension arrangement, cigarettes otherwise than in packs which have been stamped, on which tax has been paid is guilty for an offence.

The offence is subject on conviction on the summary charge to a fine up to €3,000 or twelve months imprisonment or an indictment to a fine of up to €12,695 or imprisonment for five years. The cigarettes in relation to which the offence is committed are subject to forfeiture. Any vehicle in which the cigarettes are found may be forfeited.

Any person who counterfeits, alters, or fraudulently uses a tax stamp is guilty of an offence and subject to the same punishment.

It is an offence for a person to offer for sale by retail any pack of cigarettes at a price higher than (in the case of cigarettes sold or sold by a coin-machine, above that price higher) than the retail price. There is an excise punishment of €6 for each offence. In the case of coin-operated machines, the nearest multiple of five cent to the prices allowed.

Authorised officers at the Revenue Commission have powers to enter premises of importers and manufacturers of tobacco products. They have extensive powers to search, take samples, inspect accounts et cetera. It is an offence to resist, obstruct or impede an officer of the Revenue Commissioners in the exercise of these powers. Articles involved in unlawful trade are liable to forfeiture.