KUALA LUMPUR: Fake tax stamp incidents surged 8.7 per cent last year, compared to 7.9 pp 2022, according to the 2023 full-year Illicit Cigarettes Study (ICS).
JT International Bhd (JTI) Malaysia general manager Juliana Mohd Yahaya said data revealed threefold growth in a rising trend since 2016.
She said the government should review the effectiveness of the current paper-based tax stamps and consider alternatives such as digital tax codes.
"This is in line with the government's drive towards digitalisation.
"While the setting up of the system itself may be costly, it will be cost-effective in the long-run while addressing the fake stamp issue," she said in a media briefing today.
In tackling organised smuggling of illicit cigarettes, the government should consider widening application of the Security Offences (Special Measures) Act 2012 (Sosma), Anti-Money Laundering Act 2001 (Amla) and Poca to cover smuggling offences, tax evasion and fraud, while maintaining the transhipment control, she said.
She also suggested predictable and moderate annual tax hikes to remove price shocks that drive consumers to downtrade to contraband cigarettes.
"A moderate but consistent tax increase (resulting in) a few sen hike (in cigarette price) is better as consumers generally expect such a move, while a huge one would prompt consumers to shift to illegal cigarettes, and now the cheaper vape products.
"An enforcement task force should be set up to recover billions of revenue loss caused by illicit cigarette trade."
She said some contraband items sported tax stamps similar to those on legal cigarettes and sold them at prices higher than other illicit cigarettes, making it difficult for consumers to tell them apart.
She said consumers would be able to verify this by scanning the stamp using Customs Department's `Setem Cukai' mobile app.
Meanwhile, the illicit cigarette prevalence in Malaysia remained high at 55.6 per cent last year, according to the ICS.
The study, conducted by research company Nielsen, however revealed a noticeable decline in incidence of illicit white cigarette by 1.9 percentage points (pp) from 41.4 per cent in 2022 to 39.5 per cent last year, attributed to a better cooperation with the police and Customs Department.