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13 June 2024

FTA trains customs employees to check for ‘digital tax stamps’ on tobacco products

By Wam

The import to the UAE of cigarettes not carrying ‘Digital Tax stamps’ will be banned as of May 2019 reaffirmed the Federal Tax Authority, FTA, during a training workshop.

Taking place at the FTA’s Dubai headquarters, the workshop was held to introduce employees at customs agencies across the UAE to the objectives and implementation tactics for the 'Marking Tobacco and Tobacco Products Scheme'.

It is part of the Authority’s plan to raise awareness and enhance communication with all relevant departments and authorities to combat tax evasion and tighten control procedures at entry ports. FTA experts introduced attendees to the Marking Tobacco and Tobacco Products Scheme, which went into effect at the beginning of 2019, as per Cabinet Decision No. 42 of 2018.

In a press statement issued today, the Authority explained that it is carrying through with its efforts to train customs employees in the UAE, 23 of whom attended the workshop. This adheres to the timeline outlined in FTA Decision No. 03 of 2018 on Marking Tobacco and Tobacco Products, issued by H.H. Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai, Minister of Finance, and FTA Chairman.

The Decision, which went into effect on 1st January 2019, specified the dates when the Digital Tax stamps will be made available in the UAE, as well as the storage standards and requirements, whereby tobacco importers and manufacturers are required to purchase the Digital Tax stamps and place them on the products to indicate that due taxes have been paid.

The Decision stipulates that as of 1st May 2019, importing any type of cigarettes not bearing the Digital Tax stamps would be banned, then beginning on 1st August 2019, selling or distributing any unmarked tobacco products will be prohibited across all local markets. The FTA representatives introduced customs employees to the tools and procedures set up for implementing the Scheme and verifying that the Digital Tax stamps have been placed on the packaging of tobacco and tobacco products before entering the UAE.

The experts noted that the Scheme is applicable on all types of cigarettes – imported and locally produced and distributed – and is set to be gradually expanded to cover all tobacco products, which will be digitally tracked from their production and until they reach the end-consumers, to ensure full compliance with Excise Tax obligations.

They explained that the Authority’s decision included a specific procedure for applying the Digital Tax stamps on tobacco products to indicate that Excise Tax has been paid. The digital tax stamps must be place in the manner and place determined by the Authority on each product; they will be registered in the FTA database and contain data that can be read using a sophisticated device to ensure due Excise Taxes have been paid.

FTA Decision No. 03 of 2018 notes that the Digital Tax stamps must be placed on selected Excise goods within their production facilities, immediately after packaging, if they are produced in the UAE, or prior to importing them if they are produced abroad.

The Federal Tax Authority urged tobacco suppliers to comply with the Scheme to avoid administrative penalties, which could include being barred from conducting their business until full compliance is ensured. The Scheme facilitates inspections and control at customs ports and markets to prevent the sale of products where tax obligations have not been met.