Selling or owning of cigarettes not having ‘Red Digital Tax Stamps’, according to the FTA, Federal Tax Authority is likely to get banned w.e.f. from 1st August, 2019 across local market. This is to sync with the deadline set for ‘Marking Tobacco & Tobacco product scheme’ that went live from 1st January 2019.

Decision No. 03 / 2018 was issued by the FTA pertaining to implementation of Marking Tobacco & Tobacco Products Scheme, seeking tracking of cigarette packs electronically, right from production facility to consumer end. This is to combat tax evasion, safeguard consumers from poor quality products and to ensure prompt settlement of due Excise Tax on such products.

The Authority recently had called on all the cigarette importers, producers, consumers and dealers in the UAE and instructed them to comply with this Decision Order, so as to avoid paying penalties that are otherwise clearly outlined in Violations of Procedures to Apply Digital Tax Stamps on Tobacco & Tobacco Products related with the recent Cabinet Decision. FTA’s objective here is to curb all attempts to commit commercial fraud as well as safeguard consumers from being sold with inferior products which only might harm the environment as well as their heath. It also can combat tax evasion effectively.

Two kinds of Digital Tax Stamps had been approved according to the FTA. The first is Red, which is to be placed upon the tobacco product packaging and sold at local markets, including duty-free arrival lounges. Green is the second type that has been earmarked for those tobacco products that are sold at departure, duty-free lounges.

General Khalid Ali Al Bustani, the FTA Director had highlighted relevant Taxable persons’ remarkable response towards Digital Tax Stamps procedures. Several training workshops had been organized by the concerned Authority to train inspectors at the Economic Development Dept. and Local Customs Dept. across the UAE, thereby exploring “Procedure and Objectives’ to implement Marking Tobacco & Tobacco Products Scheme.”

The workshops trained the candidates to be better equipped to carry out the assigned inspection campaigns, to ensure ban on sale of cigarettes of all types are complied upon, especially of those not having Digital Tax Stamps. This scheme is to become effective on 1st August 2019 and to be initiated in the local markets. Such courses as per Al Bustani are likely to contribute significantly towards successful new Scheme implementation, thereby facilitating inspections. It also strengthens the market and ensures prevention of sale of those products not having met tax obligations.

The tobacco products are to Digital Tax Stamps on its packaging and be registered within the FTA database. Data present in the Stamp can be read using dedicated equipment given to the authorized inspectors. They are in charge to make sure that all due taxes on such products are paid on time.

The FTA representatives during the workshop session provide valuable information on Decisions and legislation with regards to the Scheme, which also includes Cabinet Decision No. 42/2018 pertaining to Marking Tobacco & Tobacco products, thereby outlining mechanism to place Digital Tax Stamps, thereby indicating payment of Excise Tax.

In case, the product is manufactured in the UAE, then Stamps are to be placed upon the products at the production facility itself, right after packaging. If produced abroad, then Stamps are to be placed before importing them as determined by the FTA.

All businesses that supply and manufacture tobacco and related products and subjected to Excise Tax were called upon by FTA Director General to comply sincerely with the Scheme and to cooperate with Authority, so as to assist with effective and accurate implementation.

Decision is said to support efforts of FTA to combat tax evasion and collect taxes along with relevant entities to safeguard Taxable Persons’ rights as well as to ensure greater procedure transparency, which governs dealing with the FTA.