CD 33/2019 — Penalties for tobacco marking (tax stamp) violations

Factual summary

The schedule of administrative penalties the FTA imposes for breaches of the tobacco marking rules of Cabinet Decision No. 42 of 2018. Possessing or handling unmarked goods, altering or overprinting Marks and re-using Marks each attract AED 50,000 plus 50% of the excise tax due on the goods; unauthorised dealing in Marks attracts AED 25,000 (AED 50,000 on repetition) plus 50% of the amount collected as tax. Other failures (reporting movements, secure storage, returning unused Marks, affixing Marks correctly, knowingly letting premises be used to sell unmarked goods) attract AED 20,000 to AED 50,000. The penalties do not remove the obligation to pay the tax, and they can be objected to under the Tax Procedures Law.

What it means in practice Professional insight

Who: tobacco importers, producers, wholesalers, retailers and premises owners. What to check: that no unmarked or re-used-mark stock is held or sold, that every movement is reported in the System, and that Marks are stored securely and returned on time.

Key provisions

• Arts. 1–3 Administrative Penalties are monetary amounts imposed on a Person by the Authority for breaching the Excise Tax Law and Cabinet Decision No. 42 of 2018; they are imposed on the violations listed in the table appended to the decision, and imposing one does not exempt the Person from paying the Payable Tax.
• Art. 5 The Person may object to the Administrative Penalties imposed on him under the procedures of Federal Law No. 7 of 2017 on Tax Procedures; the Cabinet may add, delete or alter violations and penalties in the table (Art. 4).
• Art. 7 Effective as of the date of its issuance (1 May 2019) and published in the Official Gazette.
• Table, item 1 Possessing or handling Designated Excise Goods that do not carry a Mark: AED 50,000 and 50% of the excise tax due on the Designated Excise Goods.
• Table, item 2 Knowingly allowing one's premises to be used for the sale of Designated Excise Goods in the State that do not carry a Mark: AED 25,000 for the first violation; AED 50,000 in case of repetition.
• Table, item 3 Altering Marks affixed to Designated Excise Goods, or overprinting any Mark affixed to Designated Excise Goods: AED 50,000 and 50% of the excise tax due on the Designated Excise Goods.
• Table, item 4 Failure to report the movement of Designated Excise Goods via the electronic system defined in Cabinet Decision No. 42 of 2018: AED 20,000 per incident.
• Table, item 5 Failure to comply with the requirements to securely store Marks as determined by the Authority: AED 50,000 per incident.
• Table, item 6 Failure to comply with time limits to return unused Marks to the Authority: AED 50,000 per incident.
• Table, item 7 Failure to affix Marks to Designated Excise Goods in the manner and location specified by the Authority: AED 25,000 for the first violation; AED 50,000 in case of repetition.
• Table, item 8 Unauthorized trading, swapping, selling or otherwise supplying of Marks: AED 25,000 for the first violation; AED 50,000 in case of repetition; and a tax related penalty of 50% of the amount collected as a tax.
• Table, item 9 Re-using Marks which have previously been used on a Designated Excise Good: AED 50,000 and 50% of the excise tax due on the Designated Excise Goods.