Digital Tax Stamps Mandatory For All Waterpipe And Electrically-Heated Tobacco Products Declares Federal Tax Authority

The second phase of the Marking Tobacco and Tobacco Products Scheme is set to start on Sunday, March 1, 2020, with the scheme aiming to utilize the brand new digital solutions to enhance the efficiency of tax control systems and, in turn, support the UAEs transition to a knowledge-based economy in line with the National Agenda.

The Federal Tax Authority (FTA) reaffirmed its decision that, starting up tomorrow, the import of any waterpipe tobacco and electrically-heated tobacco products not bearing a Digital Tax Stamp (DTS) will be banned. As of June 1, 2020, the import, transport, storage and possession of such unmarked excise goods will be prohibited in all UAE local markets.

Phase one of the Marking Tobacco and Tobacco Products Scheme, which came into force on January 1, 2019, yielded promising outcomes in marking all kinds of imported, and domestically manufactured and traded cigarette packets with DTSs. The FTA directed that such products be marked before leaving the manufacturing amenities to point out the payment of the applicable excise tax throughout the UAE.

As of May 1, 2019, the FTA issued a ban on importing all sorts of unmarked cigarette packets into the UAE. Following that on August 1, the sale of cigarette packets not bearing a DTS was banned throughout all local markets.

Since the launch of Cabinet Decision No. (42) of 2018 on Marking Tobacco and Tobacco Products, the FTA rolled out a comprehensive scheme to make sure the seamless implementation of the decision. The scheme allows producers, importers and distributors of tobacco and tobacco products to buy DTSs from the system operator via the FTA website, to place them on the packaging of their products before they are launched in local markets. The FTA called on all involved entities to comply with these rules to get rid of penalties.

The FTA launched an awareness campaign for the scheme targeting stakeholders in the UAE. The campaign blanketed a workshop conducted by the system operator to familiarize the producers, importers and distributors of tobacco and tobacco products with the essential requirements. The FTA also held numerous conferences with relevant entities, such as departments of economic development and local customs agencies, to give a boost to its partnerships with all stakeholders throughout the government and private sectors, as well as make sure the successful implementation of the tax scheme.

The UAE is the first country in the region to undertake such digital solutions to guard customers from commercial fraud and low-quality products mitigate health and environmental risks and combat tax evasion. The scheme enhances the FTAs ability collect taxes, in cooperation with relevant entities, via standardized regulatory procedures that protect the rights of taxable persons and ensures their compliance, as well as boosts competitiveness and transparency throughout all of FTAs dealings.