Cigarettes must bear tax stamp by January 1

Failure to comply with tracking from January could lead to ban on tobacco product sales, FTA says

From January 1, 2019, all cigarettes sold in the UAE will need to be digitally tracked, from the point of production to the point of sale, to ensure full compliance with local tax laws.

In October 2017, the UAE introduced a 100 per cent Excise Tax on tobacco products, effectively doubling their price overnight.

The Federal Tax Authority (FTA) says that compliance with the tax reached 97.7 per cent in its first year, although the major tobacco companies have expressed concerns about a number of smaller brands potentially evading or avoiding the tax. Shaikh Hamdan Bin Rashid Al Maktoum, Deputy Ruler of Dubai, UAE Minister of Finance and Chairman of the Federal Tax Authority (FTA), issued a decision yesterday regarding the implementation of the scheme that was first announced earlier this year.

According to the decision, all types of cigarettes sold locally, both imported and locally produced, will be subject to digital tracking.

“The scheme establishes an integrated, accurate and effective control framework that supports its efforts to combat tax evasion, in collaboration with the relevant authorities … and maintain transparency in operations,” an FTA statement read.

Penalties

Failure to adhere to the new rules would lead to penalties for tobacco suppliers, the statement added. These potential sanctions include a total ban on selling tobacco products “until full compliance is achieved.”

Markings containing data that can be read using special devices will be placed on the packaging of tobacco products and then registered on the FTA’s database. These markings will be made available from January 1, 2019.

Tobacco suppliers will then have until May 1, 2019, to implement the system, after which it will not be permissible to import “designated excise goods” which do not have markings.

Then, from August 1, 2019, it will not be permissible to supply “designated excise goods” which do not have markings in the UAE, the FTA added.

The FTA could not be immediately reached for comment.