The State Tax Service and the Economic Security Bureau will allow remote access to cameras at tobacco enterprises: details of the bill

In Ukraine, state control over the production, storage, and movement of tobacco raw materials may be significantly strengthened. Relevant changes are provided by bill No. 15372 "On Amendments to the Tax Code of Ukraine and Other Laws of Ukraine to Increase the Efficiency of Control over the Production and Circulation of Tobacco Raw Materials."

The document proposes to create a comprehensive digital control system that will cover video surveillance, remote transport monitoring, automatic entry and exit control, as well as remote access for controlling authorities to video materials.

Video surveillance will become a mandatory working condition

One of the key innovations is changes to Article 20 of the Law of Ukraine "On State Regulation of the Production and Circulation of Ethyl Alcohol, Alcohol Distillates, Bioethanol, Alcoholic Beverages, Tobacco Products, Liquids Used in Electronic Cigarettes, and Fuel." The bill proposes to supplement the requirements for business entities engaged in tobacco cultivation and production of tobacco raw materials.

In particular, they must have an installed and continuously functioning checkpoint system and a 24/7 video surveillance system at places of storage of tobacco raw materials (new wording of part four of Article 20). In addition, the new wording of part twelve of Article 20 proposes to extend video surveillance requirements not only to tobacco product manufacturers but also to enterprises that produce tobacco raw materials, carry out their fermentation, or store such products.

Recordings must be stored for at least 30 days

The bill stipulates that the video surveillance system must: carry out continuous video recording, ensure storage of video archives for at least 30 calendar days, provide the ability to view online broadcasts and archived recordings, and ensure the possibility of copying information to electronic media.

Separately, it is proposed to establish that for certain excise warehouses, the minimum memory capacity of the video surveillance system must be at least 40 terabytes (new wording of paragraph 4 of part two of Article 6).

The State Tax Service and the Economic Security Bureau will receive remote access

The bill significantly expands the powers of controlling authorities. According to the new wording of paragraph 4 of part two of Article 6, as well as paragraph 4 of part twelve of Article 20, officials of tax authorities will have access to multimedia information from video surveillance systems, including remotely. In addition, separate remote access for officials of the Economic Security Bureau of Ukraine to online broadcasts and video archives is provided.

The procedure for such access is to be determined by the Ministry of Finance (new wording of part fifteen of Article 20 and corresponding changes to Articles 6 and 21 of the Law).

If the system does not work – movement of products is prohibited

One of the strictest proposed norms is the prohibition of moving tobacco raw materials if the video surveillance system fails. According to the new wording, if the 24/7 video surveillance system stops functioning, import and export of tobacco raw materials and tobacco products from the enterprise or storage location is prohibited until full restoration of its operation.

In certain cases, resumption of transport movement will be carried out only after notifying the tax authority, and for certain enterprises – in the presence of its representative.

Control will also extend to transport

In addition to video surveillance, the bill proposes to introduce a mandatory checkpoint system (new part thirteen of Article 20). It should include: barriers, electronic weighing complexes, automatic recognition of vehicle registration numbers, automatic storage of information about the date, time, vehicle weight, and license plate for at least one year without the possibility of changes.

In case of failure of the automatic number reading system or weighing complex, import and export of tobacco raw materials is also proposed to be prohibited until the faults are fully resolved.

Remote transport monitoring system

The creation of a remote control system for the movement of tobacco raw materials is envisaged. The document establishes that transportation of such products will be carried out only by vehicles equipped with control technical means (GPS or other navigation systems), which will transmit real-time information about the vehicle's location to the state information system. Transportation of tobacco raw materials without connection to this system is proposed to be prohibited.

The bill's initiators justify the introduction of these changes by the fact that in Ukraine the share of illegal tobacco products has increased to 19.8%, and annual losses to the state budget due to unpaid taxes are estimated at 33.3 billion UAH.

"Cigarettes of local manufacturers with counterfeit excise stamps account for 38 percent of the total volume of counterfeit products. About 68 percent of all illegal products are concentrated in seven regions, and approximately two-thirds of illegal cigarettes are sold through kiosks and stores. These data relate to finished tobacco products but demonstrate the scale of the illegal market and the need to strengthen control at the preliminary, raw material stage," the explanatory note states.

The proposed changes effectively form a new model of state control over the circulation of tobacco raw materials. Bill No. 15372 provides not only mandatory 24/7 video surveillance but also remote access for the State Tax Service and the Economic Security Bureau to video archives, automatic vehicle control, GPS monitoring of transportation, and the possibility of actual blocking of product movement in case of control system failures.

If the document is adopted, business entities working with tobacco raw materials will have to bring their activities into compliance with the new requirements, which will significantly strengthen the level of state supervision at all stages of production, storage, and transportation of products.

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