UAE reveals penalties for violations of digital tax stamps system

Federal Tax Authority outlines the penalties facing violators of the Marking Tobacco and Tobacco Products Scheme
UAE reveals penalties for violations of digital tax stamps system
As of May 1, the import of any type of cigarettes into the UAE not bearing the digital tax stamps has been prohibited while the sale across UAE markets of all types of cigarettes not bearing them will be prohibited as of August.
By Sam Bridge
Sat 25 May 2019 05:47 PM

The UAE's Federal Tax Authority (FTA) has revealed the penalties facing violators of the Marking Tobacco and Tobacco Products Scheme, which calls for digital tax stamps to be applied to products before being sold in local markets.

The authority said in a statement carried by state news agency WAM that the penalties are meant to curb attempts at commercial fraud, and protect consumers from contraband, low-quality products.

The FTA clarified that penalties have been set for nine types of violations of the Digital Tax Stamp Scheme in a bid to halt sales of smuggled goods in the UAE.

According to the penalties chart enclosed in the Cabinet decision, a person who possesses or handles goods that do not carry a digital tax stamp will incur a penalty of AED50,000 and 50 percent of the excise Tax due.

If a person knowingly allows his premises to be used for the sale of unmarked products in the UAE, he/she will incur a penalty of AED25,000 for the first violation and AED50,000 in case of repetition.

If a person alters or prints over digital tax stamps, they would be subject to a penalty of AED50,000 and 50 percent of the excise tax due.

The rules also state that if a person fails to report the movement of designated excise goods, they will incur a penalty of AED20,000 for each time the violation was committed.

Any person who fails to comply with time limits for returning unused digital stamps to the authority will incur a penalty of AED50,000 per incident, whereas failure to affix digital tax stamps to products exposes the person to an administrative penalty of AED25,000 for the first violation and AED50,000 in case of repetition.

The penalties’ chart also indicates that if a person conducts unauthorised trading, swapping, selling, or otherwise supplying of digital tax stamps, they incur fines of AED25,000 for the first violation and AED50,000 in case of repetition, in addition to 50 percent of the amount collected as tax.

If a person re-uses digital stamps that had previously been used, they would be subject to a penalty of AED50,000 and 50 percent of the excise tax due.

As of May 1, the import of any type of cigarettes into the UAE not bearing the digital tax stamps has been prohibited while the sale across UAE markets of all types of cigarettes not bearing them will be prohibited as of August.

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