Digital Tax Stamp for Tobacco Products
Since the implementation of VAT in January 2018, The Federal Tax Authority has been striving to enhance its ability to control and collect taxes on the tobacco products sold in the UAE, including both imported and local manufacture. In order to further the process, the FTA introduced a “Marking Tobacco and Tobacco Products Scheme” which was announced in a Press Release Dated 26th December 2018.
The Scheme which shall be effective from 1st January 2019, involves the electronic monitoring of locally manufactured, traded and imported tobacco products to ensure the payment of excise duty on such products.
All the local manufacturers as well as importers of cigarettes shall be required to apply for digital tax stamp from 1st January 2019. It shall be incorporated in the packaging of all the tobacco products to be sold in the UAE before they leave the factory.
This stamp, which shall be registered in the FTA Database, shall include electronically recorded information that can be read by a special device, through which the payment of tax on these products will be verified.
From 1 May 2019, no cigarette products without a digital stamp will be permitted to be imported into the UAE.
From 1 August 2019, no cigarettes will be allowed to be held out for sale, imported or produced anywhere in the UAE unless they carry a Digital Tax Stamp. In accordance to Cabinet Decision No. 42 of 2018 On Marking Tobacco and Tobacco Products, penalties shall also be levied on those entities who shall be involved in the production or import of any tobacco products without the Digital stamp.
In February 2019, the FTA also launched an infographic quick reference in order to provide better understanding about the installment of Digital Stamp in the packaging of tobacco products. It can be obtained from the Official FTA website.
FTA Press Release:
H.E. Khalid Ali Al Bustani, Director General of the FTA pointed out in His press release that, “the UAE is the first country in the region to use such a system which employs sophisticated methods to promote accuracy and effectiveness”.
He also stated that “This digital system is an innovative solution to support and increase the efficiency of inspections and control at customs outlets and markets and prevents the sale of non-compliant products. It shall support the FTA’s efforts to collect taxes in conjunction with the concerned authorities, implement uniform procedures that guarantee the rights and duties of taxable persons, promote competitiveness and provide the highest levels of transparency”.
The implementation of Digital Tax Stamp shall give the relevant authorities the ability to analyze and audit the supply chain in order to recognize the trade in illicit tobacco products. It shall also help them to meet the compliance standards laid down by the World Health Organization’s Framework Convention on Tobacco Control (FCTC) through the enabling of tracking and traceability of compliant tobacco products.
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