SRI resolution leaves the traceability of cigarettes, spirits and beer in the hands of the companies themselves

A resolution of Internal Revenue Service (SRI) generates controversy regarding to the Authentication, tracking and traceability system of alcoholic beverages, cigarettes and beers of national production (Simar), It changes the rules of the current system that had been implemented since 2017.

Francisco Mandiola, expert in strategic transformation and consultant for the International Tax Stamp Association (ITSA), an entity that supports governments and promotes the use of tax stamps to combat smuggling, gave the alert. The expert considers that Resolution NAC-DGERCGC21-00000019 affects the interests of the State and at the same time deteriorates the achievements in the field of control that already existed.

Mandiola explains that since 2017 Ecuador adopted the traceability system through tax stamps. Currently the system design, The stamp printing is done through the Swiss company Sicpa.

It says, however, that in mid-April, before the new government takes office, the resolution was approved in the sense that the same beer, tobacco and liquor companies can contract the traceability service.

According to the expert, this would bring at least two problems. In the first instance, it would become a process of self-examination, which could lead to less rigorous control. “It’s like leaving the cat in charge of the butcher shop”, Mandiola jokingly says. Additionally, explain that the control carried out by the authorities such as the Police would be weakened, Since there are many contracts with different traceability methodologies, agents must be trained to detect each of the new stamps and their possible counterfeits.

Effectively, Article 4 of the resolution The aforementioned indicates that “the tax identification, marking, authentication, tracking and traceability service will be provided by any provider selected for the purpose by the taxpayer, which may not be a party related to it, in accordance with the provisions of the tax regulations “. It also says that the provider will comply with the technical specifications, requirements, criteria and procedures established by the Internal Revenue Service (SRI) for the provision of the service, as provided in the Regulations for the application of the Internal Tax Regime Law.

The resolution establishes that the information of the service provided by the authorized provider (physical security components, stamped or incorporated in the goods and activated to each taxable person) must be delivered to the Tax Administration, for tax purposes, through a computer platform of integral technology, arranged by the SRI. The technical specifications will be published by the Revenue agency.

Although it was already approved, this new system would come into effect in April 2022, which is why Mandiola suggests that the Government review the decision and rather seek to apply best practices.

The expert explained that worldwide There are 27 companies that are part of the ITSA that could provide the service, there are also others that are outside the Association. He mentions the case of one who has been linked to a global tobacco company and who is in favor of these self-inspections. However, he has received criticism and fines for not fulfilling the task.

Mandiola considers that the resolution violates the tobacco control convention and the convention for the elimination of the illicit tobacco trade, and ensures that the World Health Organization (WHO) does not recommend that several companies hire the traceability system and rather indicates that it should be contracted by the Government and not by private parties..

Jorge Talbot, general manager of Embotelladora Azuaya, which belongs to the Asociación de Industriales Licoreros del Ecuador (Adile), is opposed to delegating this control to companies, especially because it will mean an extra cost to them.

For Talbot, the Simar should disappear, because it has not served its purpose, which was to combat smuggling. Rather, he considers that he has fulfilled a fiscal role, that is, to raise money. Talbot considered that the problem with the Simar is that the authority does not carry out the controls in the territory.

Meanwhile, Customs maintains the same system run by the State, which is the Fiscal Label Management and Verification System (Sigvef), which is applied to imported products. Importing liquor manufacturers consider that the system should continue as it has been until now.

Edy Castillo, president of the Association of Distributors of Liquors of Ecuador, He assured that he is struck by the fact that they want to delegate this task to the companies themselves. The State must handle the issue so that there is seriousness in the management and sale. At the time of delegating, the stamp process could be prostituted.

Currently, Castillo says, smuggling has dropped significantly and the reasons are, on the one hand, the signing of trade agreements that have been made with various countries and sectors and, on the other, the existing traceability system. A different case is that of cigarettes, where there is great smuggling activity, he says. (I)