In 2023, we analysed how Chile’s cigarette traceability system, SITRAF (Sistema de Trazabilidad Fiscal) had been performing since its inception in 2019. At that time, a study conducted by local economists found that the implementation of the system in Chile had resulted in better control of legitimate sales and increased revenues.
As is common with many government revenue institutions, the Chilean tax authority, Servicio de Impuestos Internos (SII), does not readily communicate the results of its initiatives in a public fashion. However, the authority has proven to be quite orderly in the way it moves forward with new tenders. Furthermore, the results of last year’s tender process (which are publicly available under Chilean transparency laws), seem to ratify the conclusions of the economists.
SII released its first tax stamp tender, after many stops and starts, in June 2017, which three companies responded to with their respective proposals. After much evaluation by SII, two of the companies were disqualified, the first for not being able to prove it had the necessary experience, and the second for not giving clear specifics on how it would integrate its system with existing SII software.
Finally, in February 2018, the third supplicant, SICPA, was awarded a 60-month contract, giving rise to the era of the SITRAF system, a system that is still in operation today across all domestically produced and imported cigarettes in the country. In 2023, the contract came up for renewal.
In its customary orderly fashion, SII published an RFI at the beginning of January 2023 with a deadline for answers by the end of the same month. In brief, SII sought to maintain the existing functionalities of the system but suggested that potential providers could propose upgrades to software, security, design, or other improvements to the existing system.
Although it was not obligatory for companies to respond to the RFI in order to be eligible to participate in the subsequent tender, the current provider, SICPA, was the only company that submitted answers to the RFI. This was unusual in the sense that RFIs generally attract several respondents.
Despite this uncommon occurrence, SII decided to move forward with the tender due to time constraints on the existing contract. Hence, the tender was published, again with an international public invitation, on 17 May 2023. The tender was expected to have a total value of around $30 million and the deadline for proposals was set at two months later, on 17 July 2023.
Yet again, no one other than SICPA submitted a proposal and as a result, the current provider was officially adjudicated on 28 November 2023, with the clear instruction to begin implementing the new system in Q1 2024.
As the incumbent, SICPA’s proposal was to maintain the existing system – as a continuation of sorts – but with upgrades in technology, improved service level agreements, a new minimum quantity of proprietary readers for SII field officers and a security upgrade to the existing tax stamp design.
To avoid public confusion, the tax stamp security upgrade will be accomplished by replacing the existing optical technology, used for printing the SII logo, with SICPA’s OPALINE® technology.
Other improvements were not made public but the technical evaluation that SICPA was submitted to during the tender process showed that the company complied with the requisite upgrade of existing SITRAF technology, as well as offered SII the option to include any further technological developments as they became available.
No doubt attendees at the High Security Printing™ Latin America conference in Santiago, Chile, from 3-5 June 2024, will be able to see the new programme ‘in action’ at any tobacco retailer in town.
