The extent of the tax losses from the sale of illegal tobacco products are substantial, so the Canada Revenue Agency, the Royal Canadian Mounted Police and Revenu Québec have joined forces to put a stop to this activity.
The sale of illegal tobacco products has other negative consequences, such as creating unfair competition for honest businesses. In addition, it benefits the criminal networks that control the market and use the profits to support organized crime. We want to make businesses that choose to sell illegal tobacco products aware of the consequences. We will take the appropriate enforcement measures and will apply the fines and penalties provided for by law, if necessary.
Businesses that sell illegal tobacco products to increase their profits are creating unfair competition for honest businesses. Frustrated as a result of unfair competition, legitimate businesses can inform tax authorities or the police of this situation.
A merchant who buys, sells, or is in possession of illegal tobacco products is liable to fines and a possible prison term. Several laws (the Excise Act, 2001, the Customs Act, and the Tobacco Tax Act) govern the sale of tobacco products. Under these laws, whether federal or provincial, the consequences of dealing in illegal tobacco products are serious. Offenders are liable to a fine of up to $500,000, confiscation of their property, a ban on selling tobacco products, and a prison term of up to five years.
The sale of illegal tobacco products benefits criminal organizations. Organized crime networks often benefit from such sales. These organizations use the profits to
These activities affect society in general, and they influence our children. The sale of illegal tobacco products has other extremely negative consequences for society. It means millions of dollars in lost revenue for both the Canadian and Québec governments. These losses mean that taxpayers must make up the difference through increases in income tax to finance social programs, employment programs and health care.
The sale of illegal tobacco products:
Under the Excise Act, 2001 (Statutes of Canada) and the Tobacco Tax Act (Statutes of Québec), a label or tear strip must appear on packages of cigarettes and pouches of tobacco, showing that the manufacturer has paid the relevant duties.
In Québec, cigarette packages have tear strips only. The tear strip is white and the following inscription (in black letters) appears on it: CANADA DUTY PAID – DROIT ACQUITTÉ – QUÉBEC. A label bearing the inscription QUÉBEC in black letters on a white background is affixed to each end of cigarette cartons. The manufacturer's name and address, or the manufacturer's permit number (e.g., 12-TL-345) must also appear on the package.
Cigarettes in unmarked cartons and cigarettes sold in bulk (e.g., cigarettes sold in resealable plastic bags) are illegal. If you purchase tobacco products that are not marked as required by law, you are most likely in possession of illegal products on which the applicable taxes and duties have not been paid.
Note that the presence of a tear strip or label is not sufficient: Health Canada's warning must also appear on the product.
Effective in June 2005, the rates for the duties and taxes that the manufacturers or collection officers are required to remit to the governments of Canada and Québec are as follows:
If you pay no more than the amounts shown above, the products are certainly illegal even if they seem to be marked as required by law.
Watch out for the following situations:
In all of these situations, the tobacco products are probably counterfeit, contraband or manufactured illegally.
Thinking of increasing your profit margin by selling illegal tobacco products? Think again! The Canada Revenue Agency, the Royal Canadian Mounted Police and Revenu Québec are joining forces to put a stop to this activity. If you have questions about illegal tobacco products, witness illegal transactions, or believe that you are a victim of unfair competition, contact one of the organizations below:
Web site: www.revenu.gouv.qc.ca
Royal Canadian Mounted Police
If you have information on smuggling rings, you can call the Montréal RCMP Customs and Excise Section at 514-939-8305 or 1 800 771-5401or by e-mail at firstname.lastname@example.org. All calls will be answered by an investigator and all information will be processed confidentially. You may also send us your questions or comments by mail at this address:
Royal Canadian Mounted Police
Customs and Excise Section
4225 Dorchester Blvd.
Canada H3Z 1V5
All information provided will be treated confidentially.