The UAE is the first country in the region to implement a 'digital tax stamp' scheme
The UAE’s Federal Tax Authority (FTA) will roll out a new tax control system for tobacco products at the beginning of next year, the FTA announced.
The new system – established by Cabinet Decision No. 42 of 2018 – will allow the FTA to collect taxes, ensure transparency and combat tax evasion.
According to the FTA, tobacco suppliers that don’t abide by the new scheme will face administrative penalties, which could include a ban on non-compliant businesses, forbidding them from participating in any commercial activity until they fully comply with the system.
The UAE Cabinet is expected to make another decision which will detail the administrative penalties imposed on violations of the procedures, including fines on people who possess excise goods that don’t carry digital stamps, or who allows their facilities to be used to sell such products.
The FTA also noted that penalties will be imposed on individuals who tamper with the stamps placed on tobacco products, print on top of them, or fail to declare the transfer of excise goods. Other penalties will be imposed on those who fail to comply with safe-storage requirements, undertake unauthorised trading, exchange, sell or re-use stamps.
“The UAE is the first country in the region to implement a digital tax stamp scheme for tobacco products, the most advanced of its kind in the world,” said FTA director general Khalid Ali Al Bustani.
“The system offers an innovative solution for combatting tax evasion and facilitating inspection and control at customs and markets. It prevents the sale of tobacco products where excise tax has not been settled.”
The FTA – which the Cabinet has authorised to determine the shape of the digital stamp and the conditions for applying it – will require the importer or local producer to issue an order to purchase the stamps from approved suppliers