FTA to ban the sale (supply), transport, storage or possession of water pipe tobacco products and electrically heated cigarettes that are not marked with Digital Tax Stamps with effect from 1st January 2021
The DTS system aims to combat tax evasion and commercial fraud
Abu Dhabi, UAE, 22nd December 2020: The Federal Tax Authority, FTA, has confirmed that as of 1st January 2021, it will not be permitted to sell (supply), transport, store or possess any type of water pipe tobacco or electrically heated cigarettes in the UAE unless they bear the Digital Tax Stamp (DTS).
As per Cabinet Decision No. (33) of 2019, the Authority urged those concerned and affected by the decision to comply, including local suppliers and manufacturers, to ensure that their water pipe tobacco products and electrically heated cigarettes carry a tax stamp to avoid the violations mentioned in the Cabinet Decision No. (33) of 2019 on administrative penalties for violations of procedures related to the implementation of marking excise goods.
The DTS system helps the FTA improve its ability to collect excise tax charged on water pipe tobacco or electrically heated cigarettes in the UAE after being imported or manufactured locally, as well as strengthening control over these products and enabling stakeholders to analyse the supply chain to better control illicit tobacco product.
In addition, the DTS system allows for the implementation of compliance standards by enabling the monitoring and tracking of compliant tobacco products. Accordingly, the FTA reaffirms the need for all companies, manufacturers and suppliers of tobacco and tobacco products to comply with the system and to cooperate with the Authority to implement it accurately and effectively.
The FTA explained that the DTS system facilitates inspection and control at customs outlets and local markets, in order to ban the sale of contraband products and combat commercial fraud.
The digital stamps will be placed on the packages of tobacco products and registered in the FTA database; the DTS contains data that can be read with a special device to make sure all taxes due on these products have been paid.
The Authority indicated that the system operates according to a specific and deliberate mechanism, as the DTS feature many advantages that contribute to combating the illicit trade of tobacco products. When orders are made for these stamps, they are sent to factories to be placed individually. This will ensure each package is tracked to the port of entry of each country, with the supplier submitting the permit form and the fees for the digital stamps for the digital stamps will be paid for when the suppliers make a request for them. This will ensure all digital stamps are registered and tracked through a central database.
The Authority mentioned that as of 1st of March 2020, importing water pipe tobacco products and electrically heated cigarettes that do not carry digital tax stamps are banned, as part of implementing phase 2 of the ‘Marking Tobacco and Tobacco Product scheme.’ The scheme went into effect after the successful implementation of phase 1, which banned the sale (supply), transfer, storage or possession of all types of cigarettes that do not carry digital tax stamps in local markets.
As for applying for digital stamps, the FTA said that the manufacturer or supplier needs to download the application form the FTA website (tax.gov.ae/dts) and complete the required data. They are then required to send the request to (email@example.com) to receive a user name and password to log in to the (DLR) system. The final step is to go to the ‘Manage Orders’ section where the DTS applicant will be able to record basic information to complete the application, including the target market (UAE market or duty-free).
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