The Ministry of Finance (“MoF”), with its set vision of having a systematized excise assurance mechanism in the way of digital and physical stamps, has issued a directive on excise stamp management named the “Excise Stamp Management Directive No 1004/2024”. The intent as set in the Directive’s introduction is aimed at prevention of illicit trade, proper collection of excise tax as well as protection of public health and the environment.
Having features like depicting certain words on wrapping materials excisable products distinguishing those for consumption in Ethiopia and those deemed duty free are part of the control mechanism depicting the need to trace such goods. Below are points for consideration.
Definitional Foundations
Excise stamps are a mark or an object affixed to excisable goods intended to indicate payment of excise tax on such goods. The Directive further requires such marks to take the form of digital, physical, or any other form as approved by the Minister of Finance.
A further addition is having a company appointed by the tax authority to provide Unique Identifiers for digitized stamps, print and supply stamps in an integrated system, install, configure, test, commission, support and maintain the System, and do any other things as per the direction of the tax authority.
The Unique Identifier (“UI”) to be developed by the Company is to take the form of a numeric or alphanumeric string tied with a single unique code instrumental in the monitoring and regulation of production, storage, and movement of excisable goods in Ethiopia.
Nonetheless, the aforementioned points are to be fed to the Excisable Goods Management System which includes excise stamps, a track and trace system in addition to its production accounting system and related software and hardware.
Features of the Directive
One element of the Directive is listing of products that require the affixation of excise stamps either when imported to or manufactured in Ethiopia. The nature of the listed products is composed of fluids for human consumption such as ready-to-drink products, alcoholic drinks, non-alcoholic sweetened drinks, and bottled water in addition to tobacco products.
Noting the fact that the Minister for Finance is empowered to make additions to the listed products requiring excise stamp affixation, the Tax Authority is empowered to set out the manner by which Excise Stamps are to be affixed within ninety days from the date the legislation in topic has taken effect.
A manufacturer or importer of excisable goods shall apply to the Tax Authority for excise stamps. The tax authority will determine the format and process of such an application in future legislation. Note that such an application should be submitted to the tax authority sixty days prior to the manufacture or importation of the identified excisable goods requiring excise stamp under the Directive.
Furthermore,the manufacturers and/or importers of excisable goods are required to facilitate the installation of Excise Stamp Management System in their premises utilized for the manufacture or storage of imports at their own cost.
Concerning importers of excisable goods requiring excise stamps, they are required to provide import evidence on the import of such items. Ninety days following the enactment of the Directive, specific mechanisms outlining the affixation of excise stamps to imported goods are expected to be provided by the Ministry of Finance.
A phrase worth noting under the definition of a Company is “… do any other things …” which leads one to wonder what other powers the Company will be equipped with. The Company will be appointed as per the Public Procurement and Property Administration Proclamation and Directive and hiring is done by the MoF.
The role to be played by the Company is on the development, installation and maintenance that generate UIs, supply and maintain components of the System relevant to manufacturers, print and supply of excise stamps as required by the legislation in addition to installation of other related systems. The printing or preparation of physical or digital Excise Stamps is done in a single printing facility in a secured location.
Regarding the UI, it is required to comply with the International Organization for Standardization/International Electro-technical Commission Standard (“ISO/IEC”). It is to be presented and approved by the Tax Authority. The Tax Authority, by its own volition, may delegate the generation of UI to an independent third party (“ID issuer”).
ID issuers must adhere to stringent conditions such as recording obligations as per the World Health Organization Protocol to Eliminate Illicit Trade in Tobacco Products Protocol. A further notable role of the ID issuer is in the provision of an economic operator identifier code and facility identifier code. This is with the vision to trigger efficient identification of all purchasers and the actual shipment route from manufacturing to the first customer not affiliated with the manufacturer.
Manufacturers and importers are expected to give up all necessary information to the ID issuer when requesting UIs. This will assist in the incorporation of information by the UI with details such as place of manufacturing, manufacturing facility, product description, intended market of retail sale, intended shipment route, and when deemed necessary the importer into the country.
A schedule will be issued by the Ministry of Finance for fees to be charged on excise stamps paid by the importer or manufacturer for each type of excisable goods and collected by the Company. Note that the Company avail excise stamps to the manufacturers or importers of goods identified by the Directive and as may be determined by the Minister of Finance in the future. These fees are to be paid within fifteen days prior to the issuance of stamps to the manufacturer or importer.
Concluding Remarks
Noting the significant risk posed to those who violate provisions on excise stamps as depicted on the Proclamation bringing liability in the guise of imprisonment and monetary fine, the Directive further enhances control mechanisms on the trade of such products. Although public interest and health may get a well-deserved boost, businesses are to take note of the implications for their operations and the consequences of not adhering to laid down principles.
Disclaimer: The views and opinions expressed do not reflect the official policy or position of DABLO. The writing is not intended to be, and should not be used as, a substitute for taking legal advice in any specific situation.
Download the Directive here:
