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E-tax to stub out illegal tobacco

A new electronic taxation system that aims to put an end to illicit tobacco trade in the UAE will be in place by 2014.

The pilot phase of the project, that will also help collect the government’s share of revenue generated from customs duty on tobacco products, was launched by the Ministry of Finance in 2011.

Officials said on Thursday that introduction of the federal project ‘eTobacco’ will mean tougher and stricter checks on the tobacco industry. Through implementation of the project, the MoF is working in partnership with the health ministry to reduce tobacco consumption in the country.

“It will not affect the current taxation figures but will streamline collection of the government’s share,” explained Faisal Ali Al Mansouri, Director General, Revenue Department at the finance ministry.

At present, a taxation of 100 per cent is collected from all tobacco products of which 50 per cent is the government’s share. “Some companies are not paying taxes and we want to end this practice,” said Al Mansouri.

“The minimum tax on a cigarette pack is Dh2 while products are being sold lower than the minimum price. So how are they operating,” he questioned.

Under the system, a unique tear tape/bar code will be used on the product. Each product will be scanned by the customs authorities which will assess if duty has been paid or not.

“The benefits will be great for the community, market and the UAE as smuggling will be curbed,” he said while speaking on the sidelines of the tobacco symposium organised by the Ministry of Health.

The first phase of the project is expected to be in place on cigarette packets by January 1, 2014 while it will be compulsory for all other tobacco products by 2015.

The official said that through the system, data on cigarette import, consumption, trends and other statistics will be provided to the health ministry.

Sara Saheb Al Habshi, Senior Financial Controller at the finance ministry said that the system will trace and track all tobacco import in the country. “This will also help put an end to rotation of counterfeit products and let us know the exact pattern of tobacco consumption.”

Currently, nearly all tobacco products are imported to the country. Industries in the free zones are not allowed to sell tobacco products locally. Only one unit in Ajman is manufacturing cigarettes locally. The UAE is taking strict measures to curb tobacco usage and it recently introduced federal laws to this effect.

asmaalizain@khaleejtimes.com