New system launched to combat tobacco tax evasion

Dubai / WAM

The Federal Tax Authority (FTA), announced the launch of a new electronic tracking system, which uses digital tax stamps to ensure excise tax on tobacco products has been paid, at an awareness meeting held in Dubai.
Set to go into effect in early 2019, the system seeks to combat tax evasion and commercial fraud, supporting the FTA’s efforts to successfully implement excise tax systems and verify payment of excise tax on tobacco products.
The meeting was headed by the Director-General of FTA, Khalid Ali Al Bustani, and attended by local and international producers and importers of tobacco, along with representatives from the authority and the global company that operates the system, which specialises in the manufacturing of banknotes and digital tax stamps for tobacco products
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 work out a joint action plan and identify the requirements for implementing the system. It was preceded by communication with all the companies involved, to ensure timely integration of systems and explore ways to seamlessly implement the solution in a coordinated manner.
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 for tracking and monitoring them. The use of digital tax stamps is an innovative solution to combatting tax evasion, facilitating inspections, and monitoring customs and markets to prevent the sale of products when the due taxes have not been paid. 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 special devices.
“FTA has made great progress in implementing the new system based on best international standards. The system will include integrated electronic tracking mechanisms at customs and across supply chains around UAE,” Al Bustani noted.
. It is set to be rolled out in the near future in coordination with the customs departments, as well as economic development departments and manufacturers and importers of tobacco products,” Al Bustani noted.

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 widespread compliance with UAE tax laws and regulations to avoid administrative penalties. The UAE has implemented a world-class tax system one that is based on straightforward procedures and requirements and rooted in thorough analyses and studies, he explained.