First batch of cigarette packs bearing ‘Digital Tax Stamps’ reach UAE markets

The Federal Tax Authority, FTA, has announced that the first batches of cigarette packs bearing the FTA-approved 'Digital Tax Stamps 'have reached local UAE markets; the packs can be electronically tracked to verify that the Excise Tax due has been paid.

The Authority asserted that as of 1st May 2019, importing cigarette packs not bearing the Digital Tax Stamps will be banned, while selling or distributing unmarked cigarette packs is set to be prohibited as of 1st August 2019.

In a press statement issued today, the Authority explained that as of January, the Digital Tax Stamps became available to order from the system operator and to place on cigarettes packs before leaving the factory to hit the shelves across local markets.

FTA Director-General Khalid Ali Al Bustani noted that concerned businesses around the country have overwhelmingly taken the initiative to order the Digital Tax Stamps and register them in the database.

The Digital Tax Stamps carries digital information that can be read with a special device, allowing inspectors to verify that Excise Taxes due on all locally traded cigarettes has been settled.

He pointed out that the scope of the system will be gradually expanded to include all tobacco products, which would then be electronically tracked from production and until they reach the final consumer to ensure compliance with Excise Tax obligations, and combat tax evasion and commercial fraud.

The Federal Tax Authority received large numbers of orders for the Digital Tax Stamps and directed the company tasked with operating the system to deliver them to the manufacturers in order to apply them on cigarettes supplied to UAE markets. The Authority urged all suppliers, manufacturers, and traders in local markets to avoid stocking large quantities of cigarettes not bearing the Digital Tax Stamps in preparation for the ban on trading unmarked cigarette packs in all UAE markets. The FTA clarified that as per Cabinet Decision No. 42 of 2018 on Marking Tobacco and Tobacco Products, any Person owning or trading cigarettes that don’t bear the Digital Tax Stamp will incur penalties as of August 2019.

"The Federal Tax Authority began cooperating with the international company enlisted to operate the system as of the fourth quarter of 2018 to run an awareness campaign on the FTA’s official website, as well as across social media, newspapers and audio-visual media," Al Bustani explained. "Numerous successful workshops have been organised, including presentations and Q&A sessions to introduce attendees to the electronic system for the Marking Tobacco and Tobacco Products Scheme and its objectives as per FTA Decision No. 03 of 2018 and the timeline the Authority had set in coordination with the system operator."

"The Authority will continue to hold interactive meetings to introduce participants to the procedures and timeline for implementing the system, as well as the services and facilities the FTA provides to streamline the process of registering, and the procedures for purchasing the Digital Tax Stamps online via the FTA website," he continued,

The FTA urged tobacco suppliers to comply with the Scheme to avoid penalties, which may include suspending their business operations until full compliance is achieved. The system facilitates inspections and control at customs checkpoints and local markets to prevent the sale of smuggled and non-tax-compliant products, as well as to combat commercial fraud.

To purchase the Digital Tax Stamps, the manufacturer or supplier can download the application form via the FTA's website.

Cabinet Decision No. 42 of 2018 on Marking Tobacco and Tobacco Products, issued in July 2018, stipulated that the Digital Marks be fixed on specified Excise Goods within the production facility immediately after packaging - or prior to importing them in the case of imported products - in the place and manner specified by the Federal Tax Authority.

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