New UAE tax rule on two products from November 1

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The Federal Tax Authority (FTA) is ramping up its efforts in preparation to implement the second phase of the ‘Marking Tobacco and Tobacco Products Scheme’, where it will be expanded to cover waterpipe tobacco (known in Arabic as ‘Mu’assel’) and electrically heated cigarettes as of November 1, 2019.

Digital Tax Stamps will be made available for purchase by producers and importers of waterpipe tobacco and electrically heated cigarettes, the authority revealed, as it held its second awareness workshop in Dubai to introduce them to the scheme’s procedures and objectives, as well as the timeline for the second phase. The workshop was led by FTA experts and representatives from De La Rue, the company commissioned by the authority to operate the system.

The FTA asserted that the scheme was launched to support its efforts to collect taxes, combat tax evasion, and protect consumers from commercial fraud. The FTA went on to note that these preparations follow the successful implementation of the Scheme’s first phase, where the sale and possession of any cigarette packets not bearing the ‘Digital Tax Stamps’ was prohibited across local markets as of Thursday, August 1, 2019.

FTA director general, Khalid Ali Al Bustani, said: “This workshop is part of the authority’s plan to raise tax awareness among taxable businesses, maintain constant communication with professionals working across all economic activities, and keep them in the loop with regards to the latest developments in tax procedures. These workshops allow us to listen to their opinions and suggestions, and address any obstacles they may be facing to ensure a smooth implementation of tax laws. The authority is committed to strengthening its partnerships with the various relevant entities in both the government and the private sector. These strategic partnerships are crucial for successfully implementing the tax system.”

He added that the FTA is also dedicated to organising continuous awareness campaigns, seminars, and workshops for all business sectors. FTA experts went into the details of the upcoming phase two of the ‘Marking Tobacco and Tobacco Products Scheme’, noting that as of November 1, 2019, the Digital Tax Stamps will be made available for purchase, where producers and importers of waterpipe tobacco (‘Mu’assel’) and electrically heated cigarettes are required to place them on these products to indicate that all due taxes have been settled. As of March 1, 2020, it will be prohibited to import into the UAE any of the Excise Goods outlined in FTA Decision No. (2) of 2019 on Marking Tobacco and Tobacco Products, if they do not bear the stamps. Then starting on June 1, 2020, it will no longer be permissible to supply, transfer, store, or possess said Excise Goods in the UAE unless they have the stamps.