The United Arab Emirates has set out its plans to expand its tax stamps regime for the marking of tobacco & tobacco products.

From January 1, 2019, all types of imported and locally manufactured and traded tobacco products were required to feature a digital tax stamp. Importers will be able to order stamps to be sent to the Manufacturers for application to the pack of cigarette products. On May 1, 2019, No cigarette products without a digital tax stamp will be permitted to be imported into the UAE and on August 1, 2019, extended this ban to all unmarked tobacco products across all local markets. But the products with a Digital Tax Stamp without end-to-end traceability may remain in the market if they are legitimately imported or produced between 1 May and 1 August 2019.

No cigarettes will be allowed to be stored, held out for sale, imported or produced anywhere in the UAE unless they carry a Digital Tax Stamp with end-to-end traceability. Penalties for non-compliance with this rule may apply.

As per this scheme, all tobacco manufacturers should use specific high-security control stamps and codes on all packs. it can spot and control the illicit trade of tobacco products in the market. 

The UAE then expanded the scope of the regime to cover all producers and importers of all types of water pipe tobacco and electronically heated cigarettes, with a ban on imports taking effect from March 1, 2020. As of June 1, 2020, the import, transport, storage and possession of such unmarked excise goods will be prohibited in all UAE local markets.

Further, the tax authority has launched a new mobile application, “FTA DTS” that can be used by taxpayers to check the authenticity of digital tax stamps, to tackle counterfeit goods and smuggling.

EXTP006: Postponement of the implementation of the final step of Phase Two of Marking Tobacco and Tobacco Products Scheme

The Federal Tax Authority, FTA, has issued a decision to postpone the implementation of the ban on supplying, transferring, storing, and possession of water pipe tobacco – known in Arabic as ‘mu’assel’ – and electrically heated cigarettes in the UAE that do not carry digital tax stamps until 1st January 2021.

The Authority explained that the decision to postpone this step came in support of Taxable Persons that were affected by the precautionary measures implemented to curb the spread of the novel Corona virus, COVID-19. These precautions included the temporary closures of cafés and restaurants and a ban on serving water pipes, the FTA noted, clarifying that this prevented certain producers, distributors, importers, and stockpilers of water pipe tobacco and electrically heated cigarettes from meeting the previously set deadlines and selling their unmarked stock before June 1, 2020.

With that in mind, the Authority issued the decision to postpone the implementation of the final step of the Scheme’s second phase until January 1, 2021.

The Public Clarification confirms that the Decision will not affect the previously implemented steps of phase two of the scheme nor the Excise Tax rates. In other words, Designated Excise Goods imported into the UAE will be required to carry valid DTS stamps.

The Authority indicated that, as per Cabinet Decision No. (42) of 2018 and FTA Decision No. (2) Of 2019 on Marking Tobacco and Tobacco Products, the first step of phase two of the Scheme went into effect on November 1, 2019, when importers and UAE-based manufacturers of water pipe tobacco and electrically heated cigarettes could begin ordering Digital Tax Stamps to place on the packaging of their products.

Following that, and as of March 1, 2020, importing unmarked water pipe tobacco or electrically heated cigarettes was banned in the UAE.