The United Arab Emirates (UAE) has taken a significant step in regulating excise goods through Cabinet Decision No. 33 of 2019. This decision, issued by the Prime Minister, His Highness Sheikh Mohammad Bin Rashid Al Maktoum, introduces administrative penalties for violations related to the Digital Tax Stamping of Designated Excise Goods. The move aims to bolster tax compliance and ensure that tobacco and tobacco products are appropriately Digital Tax Stamped to indicate that excise tax has been paid on them.

Scope of Administrative Penalties

The Decision outlines a table of violations and corresponding administrative penalties to be imposed on individuals or entities found in breach of the provisions. The penalties include monetary fines and tax-related penalties, encouraging strict adherence to the excise tax regulations and the proper Digital Tax Stamping of goods.

Violation Categories and Penalties

Goods Without Tax Stamped Designated Excise Goods: A penalty of AED 50,000 and 50% of the excise tax due will be imposed on any person found possessing or handling Designated Excise Goods without the required Digital Tax Stamp.

Enabling Sales of Goods Without Tax Stamped: Individuals knowingly allowing their premises to be used for the sale of Designated Excise Goods without the proper Digital Tax Stamp will face a fine of AED 25,000 for the first violation and AED 50,000 for subsequent violations.

Tampering with Digital Tax Stamps: Altering or overprinting Digital Tax Stamps on Designated Excise Goods is strictly prohibited, with penalties set at AED 50,000 and 50% of the excise tax due on the goods.

Non-Compliance with Reporting: Failure to report the movement of Designated Excise Goods through the prescribed electronic system will result in a penalty of AED 20,000 per incident.

Improper Storage of Digital Tax Stamps: Persons failing to comply with the Authority’s requirements for securely storing Digital Tax Stamps may face a penalty of AED 50,000 per incident.

Failure to Return Unused Digital Tax Stamps: Not adhering to the prescribed time limits for returning unused Digital Tax Stamps to the Authority may lead to a penalty of AED 50,000 per incident.

Incorrect Affixing of Digital Tax Stamps: Failing to affix Digital Tax Stamps to Designated Excise Goods in the specified manner and location may result in a penalty of AED 25,000 for the first violation and AED 50,000 for subsequent violations.

Unauthorized Trading of Digital Tax Stamps: Engaging in unauthorized trading, selling, or supplying of Digital Tax Stamps will lead to a penalty of AED 25,000 for the first violation, AED 50,000 for subsequent violations, and a tax-related penalty of 50% of the collected tax amount.

Reuse of Digital Tax Stamps: Reusing Digital Tax Stamps on Designated Excise Goods that have been used previously will attract a penalty of AED 50,000 and 50% of the excise tax due on the goods.

Conclusion

The implementation of administrative penalties for violations related to the Digital Tax Stamping of excise goods underscores the UAE’s commitment to enforcing tax compliance and promoting fair trade practices. Businesses and individuals dealing with Designated Excise Goods must familiarize themselves with the provisions outlined in Cabinet Decision No. 33 of 2019 and ensure strict adherence to avoid penalties and contribute to a transparent and efficient tax system in the UAE.