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|17 February, 2019

UAE FTA unveils plans to regulate Shisha tobacco products

The scheme, which already applies to cigarettes, stimulates the electronic tracking of relevant products from production to consumer.

Local couple wearing traditional clothes smoking shisha on sofa with female tourist, Dubai, United Arab Emirates

Local couple wearing traditional clothes smoking shisha on sofa with female tourist, Dubai, United Arab Emirates

Getty Images/ Antonio Saba

DUBAI- The Federal Tax Authority, FTA, revealed its plan to launch phase two of the "Marking Tobacco and Tobacco Products Scheme" during the fourth quarter of 2019, expanding it to cover tobacco products used in shisha.

The scheme, which already applies to cigarettes, stimulates the electronic tracking of relevant products from production to consumer. The announcement took place during an awareness meeting that was held today by the FTA in Dubai to discuss the scheme and its procedures and objectives.

The meeting was inaugurated by General Khalid Ali Al Bustani, FTA Director, and was attended by local and international manufacturers, importers and distributors of shisha tobacco products, as well as officials from the authority, experts, and representatives from relevant international companies. The scheme’s first phase, which came into effect on 1st January, 2019, covers all types of imported and domestically produced and distributed cigarettes. Digital marks were made available to producers and importers for placement on cigarette packs before they leave the factory for local markets, ensuring that due excise taxes are paid. As of 1st May, 2019, importing any type of cigarettes without the digital marks will be prohibited, and the sale of cigarettes packs not bearing the marks will be prohibited across the UAE from August 2019. Cabinet Decision No. 42 for 2018 on "Marking Tobacco and Tobacco Products," issued in July 2018, outlined a holistic control framework to support the FTA’s tax collection efforts and curb tax evasion, in collaboration with all relevant entities. In November 2018, FTA Chairman’s Decision No. 3 for 2018 on "Implementing the Marking Tobacco and Tobacco Products Scheme" specified the dates when the digital marks will be made available. The decision went into effect on 1st January, 2019.

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"This meeting is part of the FTA’s efforts to maintain direct communication with representatives of tobacco companies and other stakeholders in the sector, as well as with the system operator who developed the digital marks. It enables us to review our plan of action and the requirements for implementing the second phase of the scheme," Al Bustani said. "The UAE is the first country in the region to implement the system, which aims, first and foremost, to prevent tax evasion and support the authority’s tax collection efforts, in close cooperation with relevant authorities. The digital marks placed on products contain accurate tax-related data that can be read with an advanced specialist device," he added.

"The scheme also aims to provide a clear framework for assessing the quantities of tobacco and tobacco products circulating within the UAE, to ensure that these products comply with international standards, which will enable relevant authorities to keep pace with the latest developments and combat commercial fraud," he further added. "The FTA is committed to implementing its strategy and engaging all stakeholders in the public and private sectors in discussions on the new system. Therefore, several meetings were held to review our action plan, requirements and timeline for implementing the scheme.

The FTA also maintains ongoing communication with concerned companies, to help them adapt their systems to meet our requirements and coordinate between all parties involved," Al Bustani stated. The FTA explained that implementing the Marking Tobacco and Tobacco Products Scheme on imported and locally produced shisha tobacco will be done according to a timeline beginning by Q4 2019, where shisha tobacco producers and importers will be able to place their orders for Digital Marks once the FTA adopts them. They can then proceed to place them on the product packaging before they leave the production facility to hit the shelves at local markets. This makes it possible to determine whether Excise Taxes due on these tobacco products have been settled. In its second stage, the Scheme will include prohibiting the import of any type of shisha tobacco into the UAE if they do not bear the Digital Marks. The third and final stage, meanwhile, will see the sale of all shisha tobacco not bearing the Digital Marks prohibited across all UAE markets.

It urged all businesses subject to an excise tax to comply with the new regulations, and called on them to cooperate.

© Copyright Emirates News Agency (WAM) 2019.

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