The Digital Tax Stamp — 10 Things You Need to Know

It was long held that revenue stamps (also known as tax stamps) with a sophisticated appearance containing overt features such as holograms provided a strong security solution. It is now clear, however, that counterfeiters are fully capable of duplicating even the most artful designs and therefore no stamp based on overt visual features alone is immune to successful duplication. A transformation is under way…

This reality has prompted the introduction and deployment of robust digital solutions using the latest state-of-the-art offerings. Digital technologies—when properly selected and deployed—offer the most robust anti-counterfeiting solutions currently available to protect against replication (cloning) and all the fraudulent activities that accompany it.

This post provides some general guidelines and fundamental technical specifications to help excise and revenue agencies make an informed selection from these available digital solutions. Recommendations on what to avoid are also provided. No specific vendor or product is named, but only the core requirements that must be in place to launch and preserve a successful anti-counterfeiting program.


Core Requirements for a
Successful Program

Any newly designed tax stamp must be supremely robust and durable in terms of its ability to withstand cloning (successful duplication) for the duration of the program. The ideal stamp should be durable and simple—not cluttered with unnecessary components that add cost without increasing security.

The following three components (layers) are minimum core requirements.

Physical security

The tax stamp must provide tamper evidence features so that when it is removed from a genuine product, it will either leave a permanent mark or disintegrate so that it cannot be applied on another product.

Supply chain security

The tax stamp must have track-and-trace functionality, either immediately or at a future date. Therefore, the second component must include a 2D barcode containing a unique serial number that will provide the foundation for a supply chain traceability program.

Authentication security

The tax stamp must be verifiably non-duplicable with 100% assurance. It must be assumed that counterfeiters will make every attempt to copy a genuine stamp. The key requirement is that no fake stamp will ever authenticate as a real.

Tax Stamp – Product “Musts”

The following requirements must be met by a digital technology and the associated program to ensure a newly designed digital revenue stamp has the maximum chance of success.

1) Adverse event detection

The digital technology must permit immediate onsite detection of all adverse events in the marketplace. The following use cases must be supported:

  • Outright tax stamp counterfeiting and duplication
  • Tax stamp tampering 
  • Inter-state and/or inter-nation product diversion

2) Track-and-trace provision

In addition to authentication and adverse event detection, the digital technology must provide the means for product traceability from the manufacturing facility or import warehouse to the retailer.

3) Real-time data gathering, analytics
and reporting

Real-time authentication results and data on product movement through the supply chain must be made available to the government revenue agency as close to real time as possible, including store-level and inspector-level analysis. Geographic mapping of all authentications—both successful and adverse outcomes—must be captured, flagged, documented and reported. Additionally, product sales to consumers should be captured, if required, with the goal of providing real-time inventory records at all retail sites.

4) Technology robustness

The digital technology must belong to the latest generation of market offerings and must provide a clear binary outcome during the authentication exercise: "yes" the tax stamp is valid or "no" the tax stamp is suspect. It is a core requirement that not a single counterfeit or duplicated label when verified by the technology will pass authentication. There is zero tolerance for failure in this program [i.e., the false positive rate must be zero (0) percent].

5) Serialized barcode

The tax stamp must include a serialized 2D barcode, preferably Data Matrix. Each stamp must contain its own unique serial number, with no possibility of repetition with any other stamp in the same program. However, the serial number must only be used for traceability and NOT for authentication [i.e., the serial barcode itself cannot serve as the digital authentication feature].

6) Unlimited authentication allowance

The digital technology must permit unlimited authentications for any given stamp. All stakeholders—from brand owners to supply chain participants, excise inspectors and even consumers—should be allowed to use the technology for verifying the revenue stamp in an unlimited and unrestricted manner. A digital record of the number and location of all authentications for a given stamp must be available to the government revenue agency in real time.

The technology must be based on a mobile smartphone platform that may empower consumers to interact with the technology in the future and be reassured that the tax stamp and the product to which it is affixed are genuine. Both Android and Apple smartphones must be supported.

7) Use of existing label and content

To the extent possible, the digital technology must be deployable on the current revenue stamp and without the need for significant artwork alteration or inclusion of further additive components. The technology must therefore be non-additive in nature and able to interact with the serial barcode—if one is already in place—or other part of the stamp's current artwork. The digital technology should be covert and seamlessly integrate with other components of the stamp.

8) Limited use of overt (visual) technologies

Although overt visual technologies may be incorporated as part of the tax stamp artwork, they are not to be used as the first line of defense in terms of authentication but rather in a supportive role. These secondary technologies do not provide absolute verification of stamp authenticity. The digital technology alone must be the primary verification source.

9) Turnkey offering

The solution provider must take responsibility for delivering a fully integrated revenue stamp that ensures all aspects of both authentication and traceability requirements. The primary contractor must coordinate the deliverables by any needed subcontractors, including the printing and delivery of the revenue stamps, integration of the digital technology, data gathering and visualization.

10) Vendor assurance

The solution provider must:

  • Have a proven track record of success in both authentication and traceability programs;
  • Demonstrate its ability to meet the core program requirements with technology that covers all the specifications outlined here;
  • Provide compelling, documented evidence of prior work in this field on a global level to undertake a large and ambitious anti-counterfeiting program.
  • Interested in learning more? Download our free white paper, Creating the Perfect Tax Stamp.