New Digital Tax System in the UAE


The Federal Tax Authority of UAE is preparing to launch a digital tax system for tobacco products from 2019. The aim is to prevent tax evasion and counterfeiting. Digital tax stamp will ensure efficiency and transparency in the collection of tax on tobacco and tobacco products.


The Advantage of Digital Tax Stamp

The digital tax stamp is an innovative and advanced means of collecting a tax. Digital tax stamps will be placed on the packaging of the product and will contain data related to tax. The stamp – already registered in the FTA’ database – could be read by special devices.

The Cabinet decision specifies that the stamps have to be placed onto excise goods, after packaging, at the place where they are produced – (if in the UAE), or at a location outside the country prior to importing them.

The manufacturers or importer can purchase the stamps from the FTA approved supplier as per FTA guidelines. FTA also determines the due tariffs on the stamps. The supplier will have to pay the tariffs before the stamps are issued.

The decision also instructs the importer/s and producer/s or a Specific Person, who is part of the supply chain, to compulsorily keep records of the movement of all tobacco and tobacco product into and within the United Arab Emirates.


Penalties for Violation

FTA has made it clear that violation of the regulation will invite stringent penalties from the authority. Penalties include a ban on non-compliant businesses. The businesses will be forbidden from participating in any commercial activity.

The UAE cabinet is mulling administrative penalties on violation of the procedures, especially for possession of excise goods without digital stamps.

The authority stated that it will impose penalties on individuals who tamper with the stamps on the excise goods, or prints on them.