UAE Federal Tax Authority in Digital Tax Stamp inspections

Abu Dhabi: The UAE Federal Tax Authority (FTA) has conducted two simultaneous awareness and inspection campaigns — to verify compliance with the Marking Tobacco and Tobacco Products Scheme.

The move has come during the first month since the ban on selling cigarettes not bearing the Digital Tax Stamps in local markets went into effect.

The stamps, placed on cigarette packages, allow for tracking of the products from the manufacturing facility until they reach the end consumer.

The objective is to protect consumers from low-quality products, combat tax evasion, and ensure all excise taxes due on tobacco products have been paid, officials said, in keeping with Cabinet Decision No. (42) for 2018 on Marking Tobacco and Tobacco Products, and FTA Decision No. (3) of 2018 on the same subject.

Violations detected

In a press statement issued on Sunday, the authority explained that several violations were detected in August 2019 in a campaign that included 20 inspection trips conducted in collaboration with departments of economic development in all seven emirates and covering 530 retail outlets.

Furthermore, the FTA asserted that all necessary procedures were taken to ensure that violators comply with regulations in the future.

The FTA noted that as of May 1, 2019, a ban was enforced on importing cigarettes into the UAE if they did not carry the Digital Tax Stamps.

Then on August 1, the sale and possession of unmarked cigarette packets was prohibited in local markets, in keeping with the implementation timeline that began on January 1, 2019.

The Authority saod two types of Digital Tax Stamps were approved, the first of which is red and designated to be placed on cigarette packs authorised for distribution in UAE markets and at duty-free for arriving travellers, while the second is green and designed for sales of cigarette packs at duty-free in departure lounges.

FTA director-general Khalid Ali Al Bustani said the new campaign seeks to establish direct communication with dealers and consumers in local markets, and raise their awareness about the importance of full compliance with the “Marking Tobacco and Tobacco Products Scheme”.

He reiterated the Authority’s commitment to enhancing collaboration and coordination with local and federal government entities to ensure compliance with tax regulations, as well as the stability and regularity of local markets.

Awareness

“The Federal Tax Authority seeks, first and foremost, to raise awareness among Taxable Persons and consumers about their tax rights and obligations,” Al Bustani added.

“We are intensifying our efforts to support businesses and help them comply with tax systems and procedures. They are our strategic partners, and our objective is to enable them to successfully manoeuvre the tax system and self-comply with tax regulations.”

“The campaign is part of the FTA’s efforts to tighten control on local markets, protect consumers and combat tax evasion,” he explained.

“Teams of experts from the authority and departments of economic development in all seven emirates are conducting daily inspection trips to raise awareness of the tax system in general, and the “Marking Tobacco and Tobacco Products Scheme”, in particular, as well as to outline the administrative penalties that would be imposed in the event of non-compliance.”

“The joint expert teams undertake awareness campaigns in shopping malls and retail outlets, urging consumers to check for the Digital Tax Stamps on the cigarettes they purchase, which help verify that they are not counterfeit or low-quality products, and indicate that the dealer has complied with excise tax regulations, thus avoiding any administrative penalties,” the FTA Director General concluded.

As per the Cabinet Decision on violations of procedures to mark Designated Excise Goods, penalties shall be imposed if the Digital Tax Stamps were not fixed on the packaging of tobacco products before supplying them in local markets.

The decision specifies a penalty of Dh50,000 plus 50 percent of the amount of excise tax due, to be collected from any Person possessing or supplying unmarked Designated Excise Goods in the UAE.

Meanwhile, any Person that knowingly allows their facilities in the UAE to be used for the sale of unmarked Designated Excise Goods incurs a penalty of Dh25,000 for a first violation and Dh50,000 in case of repeated breaches.

In the event where a person alters or prints over Digital Tax Stamps placed on Designated Excise Goods, a penalty of Dh50,000 plus 50 percent of the amount of excise tax due is levied.

Meanwhile, if a person fails to report a transfer of Designated Excise Goods, a penalty of Dh20,000 is collected for every time the violation was committed.

Furthermore, non-compliance with the FTA’s requirements for stockpiling Digital Tax Stamps results in a Dh50,000 penalty for every instance.