REGULATION NO. 2003/23 ON EXCISE TAXES ON TOBACCO PRODUCTS IN KOSOVO

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1 UNITED NATIONS United Nations Interim Administration Mission in Kosovo UNMIK NATIONS UNIES Mission d Administration Intérimaire des Nations Unies au Kosovo UNMIK/REG/2003/23 25 June 2003 REGULATION NO. 2003/23 ON EXCISE TAXES ON TOBACCO PRODUCTS IN KOSOVO The Special Representative of the Secretary-General, Pursuant to the authority given to him under the United Nations Security Council resolution 1244 (1999) of 10 June 1999, Taking into account United Nations Interim Administration Mission in Kosovo (UNMIK) Regulation No. 1999/1 of 25 July 1999, as amended, on the Authority of the Interim Administration in Kosovo, UNMIK Regulation No. 1999/3 of 21 August 1999, as amended, on the Establishment of the Customs and other Related Services in Kosovo and UNMIK Regulation No. 2000/2 of 22 January 2000, as amended, on Excise Taxes in Kosovo, In conformity with sections 8.1 (c), (f) and (p) and bearing in mind sections 5.1 (b) and (c) of the Constitutional Framework for Provisional Self-Government in Kosovo (UNMIK Regulation No. 2001/9 of 15 May 2001), and having sought advice of the Economic and Fiscal Council, For the purpose of reforming excise taxes on tobacco products in Kosovo, Hereby promulgates the following: Section 1 Definitions For the purpose of the present Regulation: Banderol means the UNMIK fiscal control mark to be affixed to each conventional unit of tobacco products, as evidence of the payment of excise tax under the present Regulation; Conventional Unit, as the context may require, means: (a) For the purpose of calculating excise tax on cigarettes, 1-kilogram conventional weight; any cigarette shall be deemed to have 1-gram conventional

2 2 weight and, consequently, cigarettes shall be deemed to weigh 1-kilogram; any cigarette more than 9 centimetres long (excluding any filter or mouthpiece) shall be treated as if each 9 centimetres or part thereof were one separate cigarette; (b) For the purpose of calculating excise tax on cigars and cigarillos, any package intended for retail sale, regardless of the number contained therein; (c) For the purpose of calculating excise tax on other tobacco, 1 kilogram; (d) For the purpose of affixing banderols on cigarettes, any package of 20 cigarettes; (e) For the purpose of affixing banderols on cigars and cigarillos, any package intended for retail sale, regardless of the number contained therein; (f) For the purpose of affixing banderols on other tobacco, any 50-gram package; Export means the moving or delivery of a good from Kosovo and into an external area. This term shall be interpreted in a manner consistent with United Nations Security Council resolution 1244 (1999); External area means an area located outside Kosovo; Herbal Smoking Products means products commonly known as herbal cigarettes or herbal smoking mixtures; Import means the moving or delivery of a good out of an external area and into Kosovo. This term shall be interpreted in a manner consistent with United Nations Security Council resolution 1244 (1999); Person means any physical or legal person, public or private, as the context may require, including but not limited to personal business enterprises, partnerships and other business organisations, municipal and public authorities; Remission means a decision by the Director-General either to waive all or part of the amount of excise tax debt or to render void an entry in the Customs records or accounts of all or part of an amount of excise tax debt which has not been paid; Repayment means the total or partial refund of excise taxes which have been paid; Tobacco Products means any of the following products, namely (a) (b) (c) Cigarettes; Cigars and cigarillos; and Other tobacco;

3 3 which are manufactured wholly or partly from tobacco or any substance used as a substitute for tobacco, but does not include herbal smoking products; Unmarked Products means tobacco products that do not carry a banderol; Words in the singular number shall include the plural and the plural includes the singular, unless the context otherwise requires. Reference to chapters, sections, subsections and paragraphs are to those in the present Regulation, unless otherwise expressly stated. Section 2 Scope of the Regulation The present Regulation shall regulate the excise tax on tobacco products, their fiscal marking and circulation in Kosovo, and the prescribed licensing requirements. Section 3 Excise Tax on Tobacco Products 3.1 Excise tax shall be charged on tobacco products in Kosovo at the rates set out in the Annex to the present Regulation. 3.2 An excise tax debt shall be incurred through: (a) The application to acquire the banderols, at the time when such application is presented to the UNMIK Customs Service; (b) The unlawful importation of tobacco products into Kosovo, at the time of such importation; or (c) The unlawful placing into circulation in Kosovo, for any purpose, of tobacco products which have been: (i) (ii) produced in Kosovo, or introduced into Kosovo at the time of such placing into circulation. 3.3 The unlawful importation or placing into circulation under subsections 3.2 (b) and (c) above means any importation or placing into circulation in violation of the provisions of the applicable law relating to excise tax and customs.

4 4 3.4 The payment of excise tax on the tobacco products shall be evidenced by a banderol, which must be affixed to each conventional unit. 3.5 The affixation of banderols shall be the responsibility of the importer or producer, licensed in accordance with the provisions of the present Regulation. 3.6 Tobacco products chargeable with excise tax which has not been paid, may be transported within Kosovo subject to the provisions of the applicable law relating to excise tax and customs, and to such conditions as may be determined by the Director- General of the UNMIK Customs Service. 3.7 The retail sale or the offer for retail sale of tobacco products in Kosovo shall be permitted only for those tobacco products with corresponding conventional units, which are in compliance with the present Regulation. 3.8 The Director-General of the UNMIK Customs Service shall authorise the remission or repayment of the excise tax charged in accordance with this section, where it is proven to his satisfaction that (a) The tobacco products in question have been: (i) (ii) (iii) exported; rendered unusable by any person; or used solely for the purposes of research or experiment; and/or (b) Any banderol has been rendered unusable by any person. 3.9 The Director-General may provide for the remission or repayment of the excise tax in such other cases and under such conditions as may be specified. Section 4 Licensing 4.1 Subject to the exceptions provided under the applicable law, every person who imports into Kosovo tobacco products and every producer of tobacco products in Kosovo shall hold a valid licence. 4.2 Licences shall be issued by the Director-General of the UNMIK Customs Service, for which a non-returnable, annual licence fee of one hundred thousand (100,000) euro will be payable. Such fee may be amended from time to time by an Administrative Instruction issued by the Director-General.

5 5 4.3 The Director-General of the UNMIK Customs Service shall issue an Administrative Instruction setting out the procedure for the issuing of such licences. Section 5 Health Warnings The appropriate Kosovo governmental authority may prescribe that tobacco products shall carry a health warning on each conventional unit. Persons licensed under section 4.1 to import or produce tobacco products in Kosovo shall comply with any such requirement. Section 6 Offences 6.1 Any person who, in violation of the applicable law relating to excise tax and customs, sells or offers for sale or displays or otherwise deals with unmarked products commits an offence and may be subject to penalties prescribed in section Any person who, in violation of the applicable law relating to excise tax and customs, imports or exports or is in possession of or transports unmarked products commits an offence and may be subject to penalties as prescribed in section Where, in the commission of an offence under sections 6.1 and 6.2: (a) The excise tax not accounted for or paid does not exceed twenty five thousand (25,000) euro, the offence shall be punishable by a fine of up to five (5) times the amount of the excise tax not accounted for or paid and the forfeiture of the products seized; and (b) The excise tax not accounted for or paid exceeds twenty five thousand (25,000) euro, the offence shall be a criminal offence punishable upon conviction ten (10) times the amount of excise tax not accounted for or paid or a term of imprisonment of up to seven (7) years, or both, and any related products shall be liable to seizure and, upon the request to the competent court by the Director-General of the UNMIK Customs Service, forfeiture. 6.4 Any person who permits premises under his control or possession to be used for the sale of, or other dealings in, unmarked products, shall be liable to a fine of five thousand (5,000) euro. 6.5 Any person who alters, overprints, falsifies or counterfeits any banderol, commits a criminal offence punishable upon conviction by a fine of up to fifty thousand (50.000) euro or a term of imprisonment of up to seven (7) years or both, and any related products and equipment including machines, tools and other items

6 6 involved in such alteration or counterfeiting shall be liable to seizure and, upon the request to the competent court by the Director-General of the UNMIK Customs Service, forfeiture. 6.6 Any person who in violation of the present Regulation produces or imports tobacco products in Kosovo and does not hold a valid licence shall be liable to a penalty not exceeding twice the rate of the annual licence fee. 6.7 Any offence action or penalty under the present Regulation shall be applied independently from, and in addition to, any other offences detected in relation to actions specified above. 6.8 Sections 6.1 to 6.4 shall be implemented with effect from 15 November Section 7 Compliance 7.1 In carrying out their duties and in addition to any other powers vested in them under the applicable law, the UNMIK Customs Service shall have the power to apply measures to ensure compliance with the applicable law or, where appropriate, to ensure compliance with other provisions applicable to goods subject to customs supervision including, but not limited to, examination of goods, the verification of documents, examination of the accounts and other records of business undertakings, inspection of premises and other places and inspection of the means of transport of persons and goods, together with other goods carried by, with or on persons. 7.2 The power of seizure of tobacco products shall be vested in authorized customs officers and tax officials, the police and any other authority as may be designated by the Special Representative of the Secretary-General. Section 8 Enforced Collection 8.1 The Special Representative of the Secretary-General may issue administrative directions concerning enforced collection of excise tax and any charges related thereto made by: (a) (b) property; (c) Levies on accounts receivable, wages and bank accounts; Seizure of property and restrictions on taxpayers rights of ownership in Sale of property at public auctions; and

7 7 (d) Recovery of amounts from third parties, including banks or other financial institutions. 8.2 The Special Representative of the Secretary-General may also issue administrative directions specifying property that shall be exempt from levies, restrictions and seizures. Section 9 Review and Appeals 9.1 A person who contends (hereinafter the appellant ) that a determination or an assessment or a seizure made or penalty imposed, in relation to excise tax, by the UNMIK Customs Service (hereinafter the official determination ) is incorrect, may request a review of the official determination by the Director-General of the UNMIK Customs Service ( Director-General ). 9.2 An appellant s request for review by the Director-General shall be made in writing, supported by such documentary evidence as the appellant wishes to present. The request for review shall be made within 60 days of the appellant receiving notification of the official determination. 9.3 The Director-General shall notify the appellant in writing of its decision within 60 days of the date of request for review. 9.4 For the purposes of the present Regulation and subsidiary instruments issued there under, including with regard to enforced collection of excise tax, the decision by the Director-General shall be the final decision of the UNMIK Customs Service. 9.5 An appellant may appeal to a court of competent jurisdiction for the review of a final decision of the Director-General within 60 days of receiving notification of such decision. 9.6 The burden of proving that an official determination made by the UNMIK Customs Service, or a final decision of the Director-General, is erroneous shall be on the appellant. 9.7 An appellant s request for review by the Director-General, or appeal to the court for a review, made pursuant this section, shall not suspend the person s obligation to pay the excise tax assessed. 9.8 Notwithstanding section 9.7 above, there shall be no enforced collection of excise tax until the time within which a person may request a review by the Director- General has expired, or until the UNMIK Customs Service has made its final decision pursuant to section 9.4, whichever is the later.

8 8 9.9 Property seized by the UNMIK Customs Service pursuant to its powers of enforced collection shall not be sold or otherwise disposed of for a period of at least 60 days following such seizure, or while any of the review or appeal procedures provided in this section are being undertaken by a person, whichever is the later In the event that a matter is ultimately resolved in favour of the appellant, the UNMIK Customs Service shall refund any excise tax paid together with interest thereon accrued until the matter was resolved. If a matter is ultimately resolved in favour of the UNMIK Customs Service, the appellant shall pay outstanding tax, penalties and interest accrued until the matter was resolved The Director-General may issue administrative instructions setting out relevant procedural guidelines within the scope of this section. Section 10 Allocation of Revenues The revenues derived from the collection of excise tax on tobacco products shall be deposited in the Kosovo Consolidated Fund. Section 11 UNMIK Customs Service Instructions The Director-General of the UNMIK Customs Service may after consultation with the Government issue administrative instructions in connection with the implementation of the present Regulation and Administrative Directions issued there under in respect of the following matters: (a) (b) (c) Repayment or remission; Maintenance of accounts and records; Administrative appeal procedures; (d) Procedures relating to warehousing, transit and movement into, out of and within Kosovo. Section 12 Implementation The Special Representative of the Secretary-General may issue administrative directions for the implementation of the present Regulation.

9 9 Section 13 Applicable Law The present Regulation shall supersede any provision in the applicable law, which is inconsistent with it. Section 14 Entry into Force The present Regulation shall enter into force on 25 June Michael Steiner Special Representative of the Secretary-General

10 10 ANNEX Rates of Excise Tax Product Section Rate as from 1 July 2003 Rate as from 1 October 2003 Cigarettes Section 1.1 (b) i) Euros 6 Per conventional unit Euros 10 per conventional unit Cigars and cigarillos Section 1.1 (b) ii) Euros 0.50 Per conventional unit Euro 1 per conventional unit Other tobacco Section 1.1 (b) iii) Euros 6 per conventional unit Euros 10 per conventional unit

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