Federal tax authority in the view of effective application of the law, recently conducted some Inspection campaigns in the local markets across the UAE and here are some highlights from the visits made by the authorities:
1) Continued inspection visits are carried out by FTA within the framework of the Authority’s extensive efforts to cooperate with competent entities to enhance tax compliance, strengthening market performance and ensuring compliance with all tax legislation and procedures to protect legitimate trade and prevent the sale of contraband within the UAE and tax evasion.
2) The number of inspection campaigns organized by the Federal Tax Authority (FTA) witnessed notable growth during 2020 across UAE markets, some were conducted in collaboration with Departments of Economic Development and other relevant entities throughout the Emirates, to protect consumer rights and increase the level of tax compliance.
3) The FTA pointed out that the application of Excise Tax laws achieved remarkable success since their implementation, rejecting positive results primarily in the accelerated pace of building a safe and healthy society by reducing the consumption of harmful goods that negatively affect the health and wellbeing of the community.
4) FTA Director-General, His Excellency Khalid Ali Al Bustani, also added that the Authority prioritises consumers protection from harmful products that do not meet the UAE’s regulations and standards while actively combating tax evasion.
5) These efforts also support increasing the UAE Financial resources by expanding the services provided to community members.
6) In the Inspections conducted the FTA has brought to limelight the following liabilities and also exposed the below goods which are in violation to Excise tax laws –
- The FTA noted that the total value of the liabilities caught during the inspection visits amounted to AED 191,830,000 during the year 2020.
- FTA has also highlighted that in the category of goods subject to Excise Tax, 9.4 million units of cigarette packs and 14,000 kilograms of shisha tobacco products were uncovered as goods not bearing digital tax stamps and no tax has been declared or paid on them.
- Other Excise Goods caught in violation of Excise Tax laws included a total of more than 803,000 items ranging from carbonated beverages, energy drinks, sweetened drinks and electronic smoking devices (along with their tools and the liquids used in them).
7) The Federal Tax Authority adheres to international best practices to ensure that all tax legislations and procedures are implemented thoroughly. All mutual obligations between the Authority and Taxable Persons have been clearly outlined in these regulations, which seek, first and foremost, to protect consumers and tighten controls on UAE markets to ensure governance and transparency.
8) The FTA’s inspections rely on various field and electronic procedures that prevent the sale, circulation, and stockpiling of products that have not fulfilled their Excise or Value Added Tax (VAT) obligations. These procedures include –
- Marking Tobacco and Tobacco Products Scheme, which went into effect on January 1 2019, in line with Cabinet Decision No. (42) of 2018.
- The Decision calls for the display of a Digital Tax Stamp on the packaging of tobacco products and registration in the FTA’s database.
- Each stamp contains data that can be read by special devices used by authorised inspectors to verify that all taxes due on these products have been declared and settled.
Steps taken by the Federal tax Authority with respect to the Inspection Campaigns
1) The Authority has held numerous training courses for inspectors at Departments of Economic Development, as well as customs employees in all seven emirates, to ensure that the tax system is implemented smoothly and in a manner that achieves the system’s objectives.
2) The numerous partnerships established by the Authority with all concerned entities across the UAE, in both the public and private sectors, have played a fundamental role in the successful implementation of the tax system.
3) Through these partnerships, important goals have been achieved, most notably the raising of tax awareness among the business and consumer sectors. Induction workshops for business sectors in the UAE, during which all their inquiries were answered, and inspection campaigns were organized in coordination with the Federal Customs Authority and Economic Departments to alert of violating actions, allowing the correction of conditions to achieve full compliance.
H.E. concluded, “The Authority will continue to conduct its inspection campaigns within the framework of efforts carried out in cooperation with the competent entities to enhance tax compliance and reduce transactions that violate legislation and tax procedures, calling on those who are subject to taxes to adhere to the application of tax legislation to avoid penalties.