The use of tax stamps ensures the adequate collection of fiscal revenues and helps to combat illicit trade in alcohol and tobacco products. Curtailing criminal activities in this area is a challenge faced by border protection/customs authorities globally. Tax stamps are one of the most effective monitoring, control, and enforcement systems, that can be adopted by customs administrations to prevent leakages of lawful revenues due to the state. Successful anti-fraud strategies must be evidence-based and targeted to the nature of the fraud, and effective implementation will depend on well-designed and resourced surveillance systems.
Sri Lanka Customs implemented the Foolproof sticker system on imported liquor in 2019. However, due to various technical issues, as well as at the request of local manufacturers, implementation of the system on locally manufactured alcohol and tobacco products was delayed until January 2022.
The Governor of the Central Bank of Sri Lanka announced in January 2022 that ‘… government is expecting additional excise tax revenue of 60 million rupees (USD300,000) monthly by implementing the Foolproof sticker system’.
This paper will describe the Foolproof system as well as present a case study demonstrating enforcement techniques used by Sri Lanka Customs with regard to a large illegal export of foreign cigarettes to Europe in early 2021.