EDN34 Notice to all Tobacco Manufacturers – Prescribed Brands of Tobacco Products
The purpose of this notice is to outline the Canada Revenue Agency’s (CRA) procedure for submitting brand names for inclusion in the Regulations Respecting Prescribed Brands of Manufactured Tobacco and Prescribed Cigarettes and the Regulations Relieving Special Duty on Certain Tobacco Products (the Regulations). This notice will also outline the CRA’s procedure for removing brands from the Regulations.
The information in this notice is for reference purposes only and does not replace the Excise Act, 2001 (the Act) or its regulations. Should there be any discrepancy between the information in this notice and that contained in the Act or its regulations, the legislative provisions apply. As the information in this publication may not completely address your particular situation, you may wish to refer to the Act or appropriate regulation, or contact any Canada Revenue Agency regional excise duty office for additional information. These offices are listed in Excise Duty Memorandum EDM1.1.2, Regional Excise Duty Offices.
The Excise Act, 2001 (the Act) provides for relief of special duty and marking requirements for exports of tobacco products of brands that are not normally sold in Canada, provided that they are prescribed by regulation. More specifically, subsection 38(3) of the Act provides the exemption from the marking requirements for tobacco products and subsection 58(1) provides the relief from the special duty for exported products.
In September 2011, the CRA sent a letter to tobacco manufacturers providing background on the problems encountered with the prescribed brands program and gave each manufacturer the opportunity to submit up to four brands for inclusion in a package of regulatory amendments while a review of the program was conducted. As a result of this review, the CRA will be adopting the criteria outlined in the 2011 letter for all future submissions.
In order to have brands included in a regulatory amendments package, each submission should include a detailed business plan and supporting documentary evidence. This should include, at a minimum, the following:
- product formulation: how it differs from Canadian product in terms of physical characteristics before and during consumption;
- export markets: contracts in place, in development, or being negotiated;
- details of product and packaging graphics for the intended market; and
- business projections (e.g., volume, sales, markets).
Similarly, to maintain brands that are currently prescribed in the schedules to the Regulations but that have not yet been used, the same criteria will have to be met. Those brands that have not been used in the past and where there is no intent to use them in the future will be removed from the schedules to the Regulations. Beginning in 2014, the CRA will conduct periodic reviews as part of the audit and regulatory review processes to determine whether those brands currently listed are still required. Should a tobacco licensee be unable to provide adequate support for retaining those brands, it will be removed from the schedules to the Regulations.
The CRA intends to put forward a submission for regulatory amendments once per year, possibly more frequently depending on the number of requests submitted. The regulatory submission will include recommendations to add and remove names from the schedules to the Regulations. It should be noted that only once the brands are published in Part II of the Canada Gazette and form part of the Regulations will they be considered as brands "prescribed" for the purposes of subsections 38(3) and 58(1) of the Act.
Submissions and all accompanying documentation should be sent to:
Excise Duties and Taxes Division – Excise Duty Operations – Tobacco
Excise and GST/HST Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
Canada Revenue Agency
320 Queen Street
Ottawa ON K1A 0L5
All technical publications related to the Excise Act, 2001 and its regulations are available on the CRA Web site at www.cra.gc.ca/exciseduty, under the title "Excise Act, 2001 – Technical Information".
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