- Authority’s objective is to combat tax evasion and commercial fraud
Abu Dhabi: – The Federal Tax Authority (FTA) has completed its preparations to implement phase two of the ‘Marking Tobacco and Tobacco Products Scheme’ to include water pipe tobacco (known in Arabic as ‘mu’assel’), as well as electronically heated cigarette plugs, commencing November 1, 2019.
In a press statement issued today, the authority asserted that phase two builds on the success of its predecessor, where the sale and possession of any type of cigarette that doesn’t bear the Digital Tax Stamps was banned across local markets starting from August 2019. The scheme serves to protect consumers from commercial fraud and low-quality products, in addition to combats tax evasion, the authority noted.
The FTA explained that all products marked with the stamps and included under the scheme are electronically monitored from the manufacturing facility until they reach the end consumer to ensure that all excise taxes due on tobacco and tobacco products have been settled. The authority called on businesses that supply water pipe tobacco and electronically heated cigarette plugs to comply with the scheme in order to avoid any violations or interruption to their operations.
FTA Director General His Excellency Khalid Ali Al Bustani asserted that the ‘Marking Tobacco and Tobacco Products Scheme’ – which the UAE was the first in the region to implement – has helped upgrade inspection and control procedures at customs ports and markets, rendering them more effective in preventing the sale of counterfeit products that have not met their tax requirements.
Phase two of the scheme goes into effect in accordance with FTA Decision No. (2) of 2019 and the timeline the authority had set in coordination with De La Rue, the company commissioned to operate the system. H.E. Al Bustani explained that the Digital Tax Stamps are registered in the FTA database and electronically embedded with data that can be read using a dedicated device, which allows inspectors to verify that all taxes due on these products have been paid.
“Starting November 1, 2019, all producers and importers of all kinds of water pipe tobacco, and electronically heated cigarette plugs can place their orders for Digital Tax Stamps from the system’s supplier after FTA approval and then placing them on the packaging of their products before they are supplied on the market and ensure excise tax has been paid in all UAE” H.E. added. “Starting from March 1, 2020, importing any type of water pipe tobacco and electronically heated cigarette plugs into the UAE without the Digital Tax Stamps will be strictly prohibited. Following that, another ban will come into effect on June 1, 2020, this time affecting any supply, transfer, stockpiling, or circulating of unmarked waterpipe tobacco and electronically heated cigarette plugs in UAE markets,” H.E. continued, noting that retailers will also be prohibited from selling such products, and will otherwise incur penalties, as stated in Cabinet Decision No. (42) of 2018 on Marking Tobacco and Tobacco Products.
“As part of its preparations to implement phase two of the Marking Tobacco and Tobacco Products Scheme, the authority has held several meetings bringing together representatives from tobacco companies and suppliers, other stakeholders from the sector, and the system operator, where it shed light on the plan of action and the requirements for implementing the scheme in the coming period,” the FTA Director General concluded, reiterating that the FTA maintains constant communication with all government and private-sector entities to ensure a smooth roll-out of the system.
The FTA outlined the procedure for ordering Digital Tax Stamps, explaining that manufacturers or suppliers can download the application form from the dedicated link on the FTA website, fill in the required data and send the request to the link on the website (which can also be used to send queries to) to receive their username and password that will allow them to access the system, where they must click ‘Manage Request’ to enter the required data for completing the registration.
Inquiries regarding this matter may be forwarded to the customer service team through the FTA website.
Cabinet Decision No. (42) of 2018 on Marking Tobacco and Tobacco Products stipulated that the Digital Tax Stamps must be fixed on specified excise goods within the production facility immediately after packaging if produced locally – or prior to importing them in the case of imported tobacco products – in the place and manner specified by the FTA.
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The Federal Tax Authority was established by Federal Decree-Law No. (13) of 2016 to help diversify the national economy and increase non-oil revenues in the UAE through the management and collection of federal taxes based on international best practices and standards, as well as to provide all means of support to enable taxpayers to comply with the tax laws and procedures. Since its inception in 2017, the FTA has been committed to cooperate with the competent authorities to establish a comprehensive and balanced system to make the UAE one of the first countries in the world to implement a fully electronic tax system that encourages voluntary compliance, with simple procedures based on the highest standards of transparency and accuracy – beginning from registration, to the submission of tax returns, to the payment of due taxes through the Authority’s website: www.tax.gov.ae
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