MDDP at the 9th Tax Conference in Poland

During the Polish Ninth Tax Conference of Opole, our expert on customs and excise duty Agnieszka Kisielewska, raised, among others, the issue of the new Track & Trace system of tracking tobacco products.

As of 20 May 2019, the Track & Trace system of tracking tobacco products will start operating in the European Union implemented under the so-called Tobacco Directive (2014/40/EU). Every manufacturer, importer, wholesaler, cigarette distributor and every retail outlet where cigarettes can be purchased will be obliged to register in the Track & Trace system already in May 2019. In Poland, thousands of entities and retail outlets are required to register. 

Registration of entities in Track & Trace

The Track & Trace system provides for registration of the following entities operating within the European Union:

• manufacturers (including their individual plants and machines),
• importers,
• wholesalers,
• distributors and
• retail outlets, e.g. a store, a petrol station, a kiosk, a vending machine.

The purpose of registration of entities is to oblige them to report tobacco-related events, i.e. information on shipments of tobacco products by individual participants involved in their trading, until the time of handing over the products to the first retail outlet. Individual operators, including retail outlets, will be identified by the identification code assigned to them.

Event registration in Track & Trace

Events related to tobacco products that should be registered in the system include:

• events related to the movement of products (such as placing unique identifiers on unit packets or shipping from the plant, etc.)
• Transaction events (such as invoicing, receipt of payment, etc.), responsibility for recording and providing information on transaction events rests with the seller of the product.

As part of tobacco movements, information on their shipment and acceptance will be provided by manufacturers, importers, distributors and wholesalers using (depending on their location in the supply chain) primary repositories, secondary repositories and routers.

Product marking

Reporting information in Track & Trace will require prior marking of unit packaging (packages) and collective packaging (e.g. cartons, pallets) with unique identifiers. Unique identifiers will be applied to cigarette packaging – unit and collective packaging in the form of physical carriers or codes with the possibility of printing on the packaging with a time stamp.

Registration process

Polska Wytwórnia Papierów Wartościowych S.A. (PWPW) as an entity issuing identifiers will be responsible for handling the registration of entities, assigning them identification codes and for generating unique identifiers for unit and collective packaging of cigarettes.

PWPW has announced that registration of entities will be available only from 6 May 2019. Considering that by 20 May 2019 all entities are to be registered, it is recommended to prepare the entities covered by Track & Trace for the registration process in advance, which includes in particular:

• Determining whether the entity or retail outlet is subject to registration obligation,
• Gathering all information and documents necessary to obtain the identification code,
• Determining the initial demand for unique identifiers and specifying how to place them on unit and collective packaging.

Registration of entities that are not required to report movements, i.e. manufacturers from outside the European Union and retail outlets, with the consent of such entity and on its behalf, can be made by other economic entities registered in the system, e.g. importer or distributor.

Failure to register on one’s own may, however, cause a number of complications, e.g.

• one retail outlet or one manufacturer may have several identification codes;
• there may be no direct control over registration data, e.g. when a change of data is necessary.

In order to maintain control over the data identifying a given entity and retail outlet, retailers are recommended to register on their own and provide one number under which they will be registered.

Necessary steps in preparation for Track & Trace – by 20 May 2019:

• identifying new responsibilities depending on the role in the supply chain,
• enabling event reporting, including connection to repositories, router, connection to the PWPW system and ordering of unique identifiers;
• developing and implementing internal procedures for product labelling and event reporting;
• employee training;
• registration of entities, retail outlets, plants and machines.