Taxation, Customs and Excise



Regulation Description
United Kingdom
Finance Act
UK Finance Act 2001 (Legislation In Force)
(External Web Page)
Provisions in the Act set out rates of duty on tobacco products.
The Finance Act 2006 (Tobacco Products Duty: Evasion) (Appointed Day) Order 2006
(External Web Page)
This Order imposes a duty on tobacco manufacturers to avoid supplying cigarettes or hand-rolling tobacco to persons likely to smuggle them into the UK.
The Tobacco Products (Amendment) Regulations 2006
(External Web Page)
These regulations set out the obligations of tobacco companies not to facilitate smuggling. In the case of seized goods, tobacco manufacturers are required to supply detailed information about the products such as the intended customer and destination.
Tobacco Products Duty Act 1979 Chapter 7 This sets out the duty of tobacco manufacturers not to facilitate smuggling and is the primary law supporting the 2006 Tobacco Products (Amendment) Regulations
Fiscal markings on tobacco products
UK Tobacco Product Regulations 2001 (In Force)
(External Web Page)
In 1999, amidst concern for the rise in tobacco smuggling, The Chancellor of the Exchequer commissioned Martin Taylor to conduct an independent evaluation into the government anti-smuggling strategy. The result was a series of recommendations represented in a report Tackling Tobacco Smuggling, which is the main statement of policy on tackling tobacco smuggling.One of the recommendations adopted by the Government from Mr Taylor’s study was to print prominent fiscal markings on tobacco product packaging to indicate ‘UK Duty Paid’ to distinguish between legitimate trade and contraband trafficking.

The Tobacco Product Regulations 2001 requires tobacco products to carry a ‘UK Duty Paid’ marking and any retailers failing to comply are liable to a fine up to £5000.

England
Channel Tunnel
The Channel Tunnel (Alcoholic Liquor and Tobacco Products) Order 2000 (In Force)
(External Web Page)
With the Channel Tunnel an increasingly popular thoroughfare between the UK and mainland Europe, this legislation deems goods being brought into Britain via France to be commensurate to goods being imported as soon as they enter the control zone of the French side.This enables determinations to be made on imported tobacco and alcohol via the tunnel in the same way that they are in the United Kingdom.

This order applies to certain provisions relating to the relief from payment of excise duty on imported alcohol and tobacco conferred on Community travellers.

European Union
EU Tobacco Tax Directive
Council Directive 2010/12/EU of 16 February 2010 amending Directives 92/79/EEC, 92/80/EEC and 95/59/EC on the structure and rates of excise duty applied on manufactured tobacco and Directive 2008/118/EC
(external)
The EU Directive (17778/09 5807/10) has been adopted which updates EU rules on the structure and rates of excise duties on cigarettes and other tobacco products. It updates previous directives: 92/79, 92/80 and 95/59.The directive is intended to ensure a higher level of public health protection by raising minimum excise duties on cigarettes, whilst bringing the minimum rates for hand-rolled tobacco gradually into line with those for cigarettes. The measures will also narrow the differences between Member States’ tobacco taxation levels and so help tackle intra-EU tobacco smuggling.
Anti-Smuggling Measures
Agreements between the European Union and international tobacco companies to tackle the illicit trade in tobacco products.
Imperial Tobacco
(external page)

BAT Agreement
(external page)
Japan Tobacco International Agreement (pdf)
Philip Morris International Agreement (pdf)
These legally-binding agreements require the tobacco companies to implement rigorous controls to prevent the illicit trade of tobacco. If any of their own products are found to be smuggled within the EU the companies are required to pay seizure payments.
‘Personal consumption’ guidelines for Tobacco and Alcohol
Minimum Indicative Levels for tobacco products, HMRC (pdf) Minimum Indicative Levels (MILs) are used to assist Border officials in determining whether tobacco products imported from other EU Member States into the UK are for personal use. From 1 October 2011 the MILs will be reduced from 3200 cigarettes and 3kg of hand rolled tobacco to 800 cigarettes and 1kg of rolling tobacco.
EU Council Directive 92/12/EEC (In Force)
(External Web Page)
This directive rules on the general arrangements for products subject to excise duty and on the holding, movement and monitoring of such products.In addition, the directive lays down arrangement for products that are subject to excise duties and other taxes that are levied directly or indirectly on the consumption of these products.

Importantly, in the absence of restrictions on the movement of products such as tobacco and alcohol between member states, Article 9 of Directive 92/12/EEC sets out guidelines for national governments on quantities considered not to be of commercial volumes.

Excise Duties
EU Council Directive 92/79/EEC
(External Web Page)Council Directive 92/80/EEC
(External Web Page)

EU Council Directive 95/59/EC
(External Web Page)

The EU has applied limits governing the structure of tobacco duties (see directives 92/79/EEC on cigarettes, 92/80/EEC on products other than cigarettes and 95/59/EC). These may have had some effect in raising minimum duties, but their prime purpose is to stop the use of the excise tax system acting as a protectionist barrier to trade.A new proposal to restructure and raise minimum excise duties (Council Proposal COM/2001/0133 final) had been proposed by the Commission. The proposal included measures to discourage traffic flows of contraband tobacco products from low tax bracket member states to higher rate member countries. But the proposal suffered a defeat in the European Parliament and was not adopted.
EU Council Directive 2007/74/EC
(External web page)
 This directive allows member states to reduce the duty-free import limit from 200 cigarettes to 40 cigarettes for travellers arriving from a non-EU country. Similar rules apply to other tobacco products. Member states may apply the rules to people arriving by air, land or sea.

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