Starting from 1st March 2020, the FTA (Federal Tax Authority) is going to ban the import of any waterpipe tobacco (known in Arabic as ‘Mu’assel’) or electrically heated cigarette plugs that are not marked with ‘Digital Tax Stamps.’ Merchandise affixed with this Digital Tax Stamp indicates that the Excise Tax Obligations have been fulfilled on them. Starting from 1st June 2020, any supply, transfer, stockpiling, or possession of these products will also be banned unless they are marked with Digital Tax Stamps.
This is done keeping in line with the timeline set for launching phase II of the ‘Marking Tobacco and Tobacco Product Scheme.’ Phase II is aimed at protecting consumers 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 designated products from the manufacturing facility and until they reach the end consumer, ensuring they satisfy the set standards and criteria, and have met their Excise Tax obligations. It is worthy to note here that the Phase I was implemented on 1st August 2019, where the sale and possession of any type of cigarette not bearing the Digital Tax Stamps was banned across all local markets in the UAE.
FTA stressed the importance of implementing FTA Decision No. 02 of 2019 on Marking Tobacco and Tobacco Products, which went into effect on 1st November 2019. 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 accredited by the Authority – to place them on the packaging of their products before they leave the factory to be supplied to local markets across the UAE. These Digital Tax Stamps are registered in the FTA database and the data embedded on them can be read using a dedicated device by the inspectors to verify that all taxes due on these products have been paid and ensure that products are not counterfeit or illegally supplied.
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 indicate that all due Excise Tax has been paid. The Decision stipulated that the Stamps must 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.
The Federal Tax Authority has also started organising a series of training programs for inspectors from the Departments of Economic Development and Customs Agencies across the emirates. The sessions introduce participants to the objectives 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 items where the due Excise Tax has not been settled.