Digital Tax Stamp mandated for E-cigarettes, waterpipe tobacco products from January 1: FTA

By Rahul Vaimal, Associate Editor
E-cigarettes
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The Federal Tax Authority (FTA) has affirmed that any kind of waterpipe tobacco or e-cigarettes will not be permitted from 1 January 2020 unless they bear Digital Tax Stamp (DTS).

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. All types of businesses related to the waterpipe tobacco products or electrically heated cigarettes, which includes selling (supply), transporting, storing or possessing of the products will be banned without the digital stamp.

The Authority urged those who were concerned and affected by the decision including local suppliers and manufacturers, to ensure that their waterpipe tobacco products and electrically heated cigarettes (E-cigarettes) bear a tax stamp, to avoid the violations specified in Cabinet Decision No. (33) Of 2019. By law, the violators face severe administrative penalties.

The DTS framework enables the FTA to boost its ability to collect an excise tax on waterpipe tobacco or e-cigarettes imported or produced locally in the UAE, as well as to strengthen control over these goods and to allow stakeholders to examine the supply chain to control illegal tobacco products.

Besides, the DTS system enables enforcement requirements to be implemented by allowing compliant tobacco products to be regulated and tracked. Accordingly, the FTA confirms the need for all tobacco and tobacco products businesses, distributors, and suppliers to comply with the system and to collaborate with the Authority to enforce it accurately and effectively.

The FTA explained that the DTS system facilitates inspection and control at customs outlets and local markets, to ban the sale of contraband products and combat commercial fraud.

DTS

Digital stamps shall be imposed on packages containing tobacco products and shall be registered in the FTA database; the DTS shall contain information that can be read through a special device to ensure that all taxes owed on such products have been paid.

The Authority pointed out that the system operates based on a specific and deliberate framework since the DTS has many advantages that contribute to the fight against the illegal trade in tobacco products. They are sent to factories to be put individually when orders for these stamps are made.

This will ensure that each shipment is monitored at each country’s port of entry, with the supplier submitting the permit form, and when the suppliers request it, the fees for the digital stamps will be charged. This would ensure the registration and monitoring of all digital stamps through a central database.

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