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- The Federal Tax Authority urged producers and sellers of these products to abide by the timeline set for the ‘Marking Tobacco and Tobacco Products Scheme’.
- H.E. Khalid Al Bustani: The Scheme supports the Authority’s efforts to collect taxes and protect consumers from commercial fraud.
Abu Dhabi:Importing any type of waterpipe tobacco (known in Arabic as ‘Mu’assel’) or electrically heated cigarette plugs that are not marked with ‘Digital Tax Stamps’ will be prohibited across the UAE as of March 1, 2020, asserted the Federal Tax Authority (FTA).
The ban is in keeping with the timeline set for launching phase two of the ‘Marking Tobacco and Tobacco Products Scheme’, the FTA explained, adding that it serves to protect consumers from commercial fraud and low-quality products. The Authority called on producers, importers, and distributors of these products to abide by the system, as directed in Cabinet Decision No. (42) of 2018 on Marking Tobacco and Tobacco Products. The Stamps allow for tracking the designated products from the manufacturing facility and until they reach the end consumer, ensuring they satisfy the set standards and criteria, and have met their Excise Tax obligations.
In a press statement issued today, the Authority stressed the importance of implementing FTA Decision No. (2) of 2019 on Marking Tobacco and Tobacco Products, which went into effect on November 1, 2019. The Decision saw the Authority begin providing Digital Tax Stamps in collaboration with De La Rue, the company operating the system, allowing importers and producers of waterpipe tobacco and electrically heated cigarette plugs to place their orders for Stamps they could fix onto their merchandise to indicate that they have paid all Excise Taxes.
The FTA Decision stipulates that as of March 1, 2020, all Designated Excise Goods outlined in the Decision will no longer be allowed to be imported to the UAE unless they are marked with Digital Tax Stamps. Then as of June 1, 2020, any supply, transfer, stockpiling, or possession of these products will be banned unless they are marked with Digital Tax Stamps.
FTA Director General His Excellency Khalid Ali Al Bustani asserted that implementing phase two of the ‘Marking Tobacco and Tobacco Products Scheme’, which consists of expanding it to include waterpipe tobacco and electrically heated cigarette plugs, is a continuation of phase one, where the sale or possession of any type of cigarette not bearing the Digital Tax Stamps was banned across all local markets in the UAE as of August 1, 2019.
“The Scheme supports the FTA’s efforts to collect taxes, combat tax evasion, protect consumers from commercial fraud, prevent the sale of subpar products in local markets, and help protect the environment and public health,” H.E. added. “The Authority is working to implement the system in collaboration with customs agencies and Departments of Economic Development. It relies on advanced, accurate, and efficient electronic procedures to ensure all legislation issued in that regard – which outlined the obligations of both the Authority and Taxable Persons – are implemented and that consumers are protected.”
“The Federal Tax Authority sought to execute a comprehensive awareness campaign to make sure local markets are prepared, well in advance, for implementing the second phase of the ‘Marking Tobacco and Tobacco Products Scheme’ as seamlessly as possible and without any disruptions to the sector’s commercial operations,” H.E. Al Bustani explained. “The FTA collaborated with the system operator to organise meetings and workshops with importers, producers, and sellers of tobacco and tobacco products, where attendees were introduced to the tax system, and experts from the Authority answered their questions. Furthermore, media and advertising campaigns were carried out through traditional and social media channels to introduce the scheme and the timeline set for implementing it.”
The FTA Director General went on to reveal that the Authority has started organising a series of training programmes for inspectors from Departments of Economic Development and Customs Agencies across the emirates. The sessions introduce participants to the objectives and procedures of the Scheme, highlighting mechanisms to verify that all tobacco products in circulation have been marked with Digital Tax Stamps, which, in turn, tightens control and inspection at customs ports and markets to prevent the sale of contraband products or items where the due Excise Tax has not been settled.
The Authority 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, and ensure that products are not counterfeit or illegally supplied.
Producers and importers of all types of waterpipe tobacco and electrically heated cigarette plugs can place their orders to purchase Digital Tax Stamps from the system operator – once they are accredited by the Authority – to place them on the packaging of their products before they leave the factory to be supplied to local markets across the UAE.
Cabinet Decision No. (42) of 2018 on Marking Tobacco and Tobacco Products outlined the mechanism for applying the Digital Tax Stamps on Designated Excise Goods to indicate that all due Excise Tax has been paid. The Decision stipulated that the Stamps must be fixed onto the products 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 Federal Tax Authority.
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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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