Importing Waterpipe Tobacco and Electrically Heated Cigarettes to UAE without Digital Tax Stamps to Be Banned from March 1, 2020

Importing any type of waterpipe tobacco (known in Arabic as Muassel) or electrically heated cigarette plugs that are not marked with Digital Tax Stamps will be prohibited throughout the UAE as of March 1, 2020, asserted the Federal Tax Authority (FTA).

The ban is in keeping with the timeline set for launching phase two of the Marking Tobacco and Tobacco Products Scheme, the FTA explained, including that it serves to guard customers from commercial fraud and low-quality products. The Authority called on producers, importers, and distributors of these products to abide by the system, as directed in Cabinet Decision No. (42) of 2018 on Marking Tobacco and Tobacco Products. The Stamps allow for tracking the unique products from the manufacturing facility and till they reach the end consumer, making sure they satisfy the set standards and criteria, and have met their Excise Tax obligations.

In a press statement issued on February 11, 2020 the Authority stressed the significance of imposing FTA Decision No. (2) of 2019 on Marking Tobacco and Tobacco Products, which went into effect on November 1, 2019. The Decision noticed the Authority start providing Digital Tax Stamps in collaboration with De La Rue, the company operating the system, allowing importers and producers of waterpipe tobacco and electrically heated cigarette plugs to place their orders for Stamps they could fix onto their merchandise to point out that they have paid all Excise Taxes.

The FTA Decision stipulates that as of March 1, 2020, all Designated Excise Goods outlined in the Decision will no longer be allowed to be imported to the UAE unless they are marked with Digital Tax Stamps. Then as of June 1, 2020, any supply, transfer, stockpiling, or possession of these products will be banned except they are marked with Digital Tax Stamps.

FTA Director General His Excellency Khalid Ali Al Bustani asserted that enforcing phase two of the Marking Tobacco and Tobacco Products Scheme, which consists of expanding it to include waterpipe tobacco and electrically heated cigarette plugs, is a continuation of phase one, where the sale or possession of any type of cigarette not bearing the Digital Tax Stamps was banned throughout all local markets in the UAE as of August 1, 2019.

The Scheme supports the FTAs efforts to collect taxes, combat tax evasion, guard consumers from commercial fraud, prevent the sale of subpar products in local markets, and assist protect the environment and public health, H.E. added. The Authority is working to enforce the system in collaboration with customs agencies and Departments of Economic Development. It depends on advanced, accurate, and efficient electronic procedures to make sure all legislation issued in that regard which outlined the obligations of both the Authority and Taxable Persons are applied and that consumers are protected.

The Federal Tax Authority sought to execute a complete awareness campaign to make sure local markets are prepared, well in advance, for enforcing the second phase of the Marking Tobacco and Tobacco Products Scheme as seamlessly as possible and without any disruptions to the sectors commercial operations, H.E. Al Bustani explained. The FTA collaborated with the system operator to organise meetings and workshops with importers, producers, and sellers of tobacco and tobacco products, where attendees have been introduced to the tax system, and professionals from the Authority answered their questions. Furthermore, media and advertising campaigns have been carried out via traditional and social media channels to introduce the scheme and the timeline set for implementing it.

The FTA Director General went on to reveal that the Authority has began organising a series of training programmes for inspectors from Departments of Economic Development and Customs Agencies throughout the emirates. The sessions introduce participants to the goals and procedures of the Scheme, highlighting mechanisms to verify that all tobacco products in circulation have been marked with Digital Tax Stamps, which, in turn, tightens control and inspection at customs ports and markets to prevent the sale of contraband products or objects where the due Excise Tax has not been settled.

The Authority defined that the Digital Tax Stamps are registered in the FTA database and electronically embedded with data that can be read using a dedicated device, which enables inspectors to confirm that all taxes due on these products have been paid, and make sure that products are not counterfeit or illegally supplied.

Producers and importers of all types of waterpipe tobacco and electrically heated cigarette plugs can place their orders to purchase Digital Tax Stamps from the system operator once they are approved by the Authority to place them on the packaging of their products earlier than they depart the factory to be supplied to local markets throughout the UAE.

Cabinet Decision No. (42) of 2018 on Marking Tobacco and Tobacco Products outlined the mechanism for applying the Digital Tax Stamps on Designated Excise Goods to point out that all due Excise Tax has been paid. The Decision stipulated that the Stamps have to be fixed onto the products within the production facility immediately after packaging if produced locally or prior to importing them in the case of imported tobacco products in the place and manner specified by the Federal Tax Authority.