Digital Tax Stamp System in UAE
The Digital Tax Stamp system is a tax managing scheme introduced by the FTA in August 2019. The new excise tax scheme mandates that tobacco manufacturers and stakeholders are required to comply with FTA’s improved standards when they import and sell tobacco products in the UAE market.
How Does Digital Stamp Work?
In line with the new excise tax system, the tobacco manufacturers are required to mark their products with the Digital Tax Stamp at their production facility after the packaging, if the production is done locally. The stamp must be put before importing if the products are imported.
The FTA has imparted special training to inspectors of the Departments of the Economic Development and Customs Agencies across the emirates. The authority has developed special mechanisms to ensure that the tobacco products in circulation bear the Digital Tax Stamps.
The Tax Stamps have been registered in the FTA database and are embedded with data, which can be read with the help of a dedicated device. Using the device, the inspectors of the Departments of the Economic Development and Customs employees can ensure that all the pending taxes have been settled.
Salient Features of The Digital Tax Stamp System
FTA’s ‘Marking Tobacco and Tobacco Products Scheme’ is a new milestone in the excise tax system in the UAE. With the new tax managing program, the FTA is hoping to achieve the following goals:
- The scheme is likely to safeguard the consumers from commercial fraud and low-quality products
- It will enable the FTA to tackle tax evasion in an efficient manner
- It empowers the FTA to collect and control taxes on all imported or locally made tobacco products sold in the UAE market
- The scheme allows the FTA to monitor and curb the sale of illicit products in the market as relevant authorities are entrusted with analyzing and auditing the supply chain
Major Milestones Achieved
- 1 January 2019: all the importers and the cigarette producers in the UAE were allowed to order stamps for application
- 1 May 2019: The FTA prohibited any company to import cigarette products without a digital tax stamp
- 1 August 2019: All cigarette products to be imported or produced or sold in the UAE market need to have the Digital Tax Stamp on them with end-to-end traceability. However, the FTA allowed products with a Digital Tax Stamp without end-to-end traceability to stay in the market if they are legitimately imported or produced between 1 May and 1 August 2019
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