GCC Indirect Tax Weekly Digest

UAE developments

FTA publishes Excise Tax Public Clarification on Digital Tax Stamps scheme

The United Arab Emirates (UAE) Federal Tax Authority (FTA) has published an Excise Tax Public Clarification (EXTP002) on the Digital Tax Stamps (DTS) scheme.

The DTS scheme is intended to monitor Excise Tax compliance and combat the illegal trade of tobacco products in the UAE by mandating the application of Stamps on certain tobacco products to enable the tracking of the goods throughout the supply chain, thereby ensuring tax is paid on them as required (Designated Excise Goods).

EXTP002 discusses the movement of Designated Excise Goods marked with a Stamp not containing end-to-end traceability, which was a format of Stamp approved during the initial interim period of DTS Scheme. From 1 August 2019, such stamps without end-to-end traceability were phased out and all designated excise goods entering the UAE must now carry a stamp with an end-to-end traceability function.

The Public Clarification states that Designated Excise Goods which had a Stamp applied under the workaround solution until 1 August 2019 without end-to-end traceability can remain in the UAE market as long as they were imported legitimately prior to 1 August 2019.

Further, Designated Excise Goods with Stamps lacking end-to-end traceability which entered an Excise Designated Zone with a customs check between 1 May 2019 and 1 August 2019 can be moved into the UAE mainland or Duty Free areas after 1 August 2019 and still be considered compliant with the DTS scheme.

The Public Clarification addresses issues that importers of tobacco products have been facing following the initial introductory phase of the implementation of the DTS scheme and clarifies the legality of the movement of such goods subject to the relevant conditions.

This digest is for information purposes only and should not be construed as advice. It does not necessarily cover every aspect of the topics with which it deals. You should not act upon the contents of this alert without receiving formal advice on your particular circumstances.