ARTICLE 6 INDIRECT TAXES 1. State Parties shall effectively co-operate in the harmonisation of the administration of indirect taxes. 2. Each State Party shall, in line with the World Trade Organisation agreements, gradually substitute taxes on internationally traded goods and services with broad-based indirect taxes on consumption. 3. State Parties shall, collectively, explore areas of possible co-ordination for policy formulation and administration in respect of excise duties on: (a) tobacco products; (b) alcoholic beverages; (c) non-alcoholic beverages; (d) fuel products; (e) luxury goods and services; and (f) any other excisable goods and services. 4. Each State Party shall, as far as is possible, promote the use of excise duty on an ad valorem basis on luxury goods and services as an alternative to the application of multiple VAT rates or sales tax rates; provided that it is accepted that the classification of goods and services as being luxury goods and services may, due to shifts in economic and social conditions, change from time to time. 5. State Parties shall, in an effort to minimise incidents of smuggling, take such steps as are necessary to harmonise the application of excise duty rates, with particular regard to tobacco products, alcoholic beverages and fuel products. 6. State Parties shall take such steps as are necessary to exchange information among themselves, and to engage in such programmes of mutual assistance and co-operation as may be appropriate, in order to prevent unlawful activities and, in particular, the smuggling of goods and the importation of counterfeit items. 7. State Parties shall in an effort to combat cross-border smuggling activities, identify areas of co-operation and agreement for: (i) the protection of their respective tax bases; and (ii) addressing the problem of tax leakage and gaps in tax compliance. 8. State Parties shall give consideration to entering into bilateral agreements with each other, based on a SADC model tax agreement in order to deal with, among other things, the exchange of information on 49