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FTA announces ‘smoking’ new electronic tracking system for Excise Tax

During an awareness meeting held in Dubai,  the Federal Tax Authority (FTA) announced launching a new electronic tracking system that uses digital tax stamps to ensure that Excise Tax on Tobacco products was paid.

The meeting is part of the Authority’s efforts to reach out to tobacco companies as well as the company behind the tax stamp system to carry out a joint action plan and identify the requirements for implementing the method.

It was preceded by several communications with all companies involved, to ensure appropriate systems integration and explore ways to implement the solution in a coordinated manner seamlessly.

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When to expect the new stamp?

Set to come into effect in early 2019, the system seeks to combat tax evasion and commercial fraud, supporting the FTA’s efforts to implement Excise Tax systems successfully and verify payment of Excise Tax on tobacco products.

The system seeks to ensure that all Excise Taxes on cigarettes – and later on, all tobacco products – is collected. To that end, digital stamps will be attached to these products, which allows tracking and monitoring them.

The use of digital tax stamps is an innovative solution to combat tax evasion, facilitate inspections and monitor customs and markets in order to prevent the sale of products when the due taxes have not been paid.

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Where can you find these stamps?

The digital tax stamps are placed on the packaging of tobacco products and registered in the FTA’s database. The stamps contain tax-related data that can be read using particular devices.

“The system will include integrated electronic tracking mechanisms at customs and across supply chain around the UAE. It is set to be rolled out shortly in coordination with the customs departments, as well as economic development departments, and manufacturers and importers of tobacco products,” said FTA Director-General, Khalid Ali Al Bustani.

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The FTA Director-General urged all companies operating in the tobacco manufacturing and supplying sector – which is subject to Excise Tax – to comply with the new system and its requirements and to cooperate with the Authority to implement it and ensure the widespread compliance with UAE tax laws and regulations to avoid administrative penalties. The UAE has implemented a world-class tax system, H.E. explained, one that is based on straightforward procedures and requirements and rooted in thorough analyses and studies.