NEW DIGITAL TAX SYSTEM FOR TOBACCO PRODUCTS
In order to efficiently collect taxes and combat tax evasion, the FTA has launched a tax control system called as Cabinet Decision No. (42) of 2018 on Marking Tobacco and Tobacco Products in UAE . This scheme is to be implemented in collaboration with relevant authorities to ensure a single integrated set of procedures , to guarantee the protection of rights and responsibilities of taxable person and for transparency with regards to the procedures that regulate their relationship with the authority.
NEED OF DIGITAL TAX STAMP
The digital tax stamps that are placed on the packaging of tobacco products and are registered in the FTA’s database contain tax related data that can be read with the help of special devices. This system offers an innovative solution for the purpose of combating tax evasion and facilitating inspection and control at customs and market and also prevents sale of tobacco products where excise tax has not been settled.
CABINET DECISION NO. (42) of 2018 ON MARKING TOBACCO AND TOBACCO PRODUCTS
The Cabinet decision that has been issued by the authority outlines the procedure that is to be followed to apply the stamps on tobacco products, the dates on which marks will be made available, procedure for supply of marks,track and trace of designated excise of goods and about storage of marks.
Article 2 deals with the DATES ON WHICH MARKS WILL BE MADE AVAILABLE and states that, the chairman is required to issue a decision with respect to the dates :
- On which the marks will be available to place an order for the same by the importer or the producer for each category of designated excise goods
- From which it would not be permissible to import designated excise goods which do not have a mark in accordance with the provisions of this decisions
- From which it would not be permissible to supply designated excise goods in the state which do not have marks in accordance with the provisions of this decision
MANNER IN WHICH THE MARKS ARE TO BE APPLIED ON DESIGNATED EXCISE GOODS( Article 3)
In order to indicated that tax has been paid on the goods, the mark is to be applied as per the following conditions:
- The producer shall place marks on the designated excise goods
- The marks shall be affixed to the designated excise of goods in the manner and location as specified by the authority
Location Where The Marks Are To Be Affixed:
- After packaging, on the production facility of designated goods located within the state
- If the goods are produced outside the state, at a location outside the state, prior to import
PROCEDURE FOR SUPPLY OF MARKS (Article 4)
An importer or a producer shall submit a request to the authority as per the procedure established by the Authority indicating the quantity of the designated excise goods on which he desires to affix marks along with any other information required.
After considering the request, if the authority approves the same then the importer or producer in the state shall purchase the marks from the entity determined by the Authority as per the procedure specified by the Authority. The Authority is also required authorise about the fees that is payable by the importer or producer before issuing the marks.
STORAGE OF MARKS (Article 6)
The marks that have been supplied by an authorized supplier are to be stored securely by any person possessing the marks prior to the marks being affixed to the designated excise goods.
Furthermore , the authority has the power to specify the minimum security requirements that are to be imposed on storage of marks.
In the following circumstances, the marks that are in possession should be returned to the Authority:
Where the person has become aware that he no longer has the intention to use the marks for the purpose of affixing them to designated excise goods
Where more than 12 months have passed since the person has received the marks but during that period, the marks have not been affixed to designated excise goods
In any other circumstance as specified by the authority
The tobacco supplier thus must abide by the new scheme in order to avoid the administrative penalties which could be :
- Ban on non compliant businesses
- Preventing the businesses from exercising any commercial activity until they are fully compliant with the system
PERSONS ON WHOM PENALTIES CAN BE IMPOSED
Penalties can be imposed on persons who :
- Tamper with the stamps placed on the goods or who prints on top of them
- Fail to declare the transfer of excise goods
- Fail to comply with safe storage requirements for stamps
- Undertake unauthorised trading
- exchange , sale or supply re- use previously used stamps