In the first quarter of 2021, Q1-21, the Federal Tax Authority (FTA) performed over 2,707 field audit visits in collaboration with the appropriate authorities across 35 inspection campaigns across UAE markets, as part of its continuing supervision attempts to safeguard consumer interests and improve tax enforcement. Khalid Ali Al Bustani, Director-General of the FTA, clarified that the Authority's advanced, cutting-edge instruments used during inspections enable inspection teams to carry out their assignments efficiently using the most recent field electronic mechanisms that conform to best practices.

This helps to stiffen restrictions on UAE markets, preventing the selling, circulation, and hoarding of goods that have not met their Excise or Value Added Tax (VAT) obligations.

“One of these tools is the ‘Marking Tobacco and Tobacco Product' scheme, that went into effect on January 1st, 2019, in the enforcement of Cabinet Decision No. (42) of 2018, which defined the necessity to place DTS on cigarette packets and tobacco products, including waterpipe tobacco and electrically warmed cigarettes, after documenting them in the FTA database,” Al Bustani said. Each DTS provides data that can be viewed by a special instrument to ensure that all taxes on the goods have been paid.

“The tax enforcement rates found in the results of the audit campaigns carried out in the first quarter of 2021 indicate the effectiveness of the Authority's oversight activities worked out in collaboration with the qualified entities,” Al Bustani said. The Authority will continue to increase its efforts to assist companies in complying with tax processes and initiatives as the Authority views them as strategic allies and seeks to improve their understanding and capacity to self-comply.”

Al Bustani emphasized the FTA's commitment to protecting consumers from harmful products that do not meet the UAE's regulations and standards and fighting tax avoidance by effective enforcement of tax legislation and procedures that articulate all mutual obligations between the Authority and taxable persons while ensuring optimum consumer protection through precise procedures, to tighten constrictions.

Sara Al Habshi, FTA Director of Tax Compliance and Enforcement Department, reported that during the first three months of 2021, more than 256 Value Added Tax violations and 248 violations relating to suspensions in the range of ‘goods subject to Excise Tax' were found, with a total value of Dhs 74 million. It included 3.3 million cigarette boxes and 58,200 kilograms of waterpipe tobacco items that lacked Digital Tax Stamps, DTS, and 1,316 electronic smoking devices which were not recorded in the Authority's electronic framework.

According to Sara Al Habshi, "Other Excise Goods were identified in violation of Excise Tax laws during these inspection visits, totaling more than 11,166 products, including carbonated beverages, energy drinks, and sweetened drinks."

“The Authority's level of compliance in the business areas protected by the inspection campaigns conducted during the first quarter of 2021 surpassed 77 % indicating the impressive increase in tax compliance rates in the UAE's markets,” she added. The Authority will continue to implement inspection activities as part of measures carried out in collaboration with responsible authorities to improve tax conformity and discourage transactions that circumvent legislation and tax practices, urging those subject to taxes to follow tax laws to prevent punishments.”

The Federal Tax Authority was created by Federal Decree-Law No. (13) of 2016 to help broaden the national economy and raise non-oil revenues in the UAE through management and collection of federal taxes based on global best practices and standards, and to provide all means of assistance to taxpayers for them to cooperate with tax laws and procedures. Since its inception in 2017, the FTA has been focused on working with relevant authorities to develop a comprehensive and sustainable system that will make the UAE one of the first countries in the world to introduce a fully electronic tax system that promotes voluntary compliance, with simple procedures based on the maximum transparency and accuracy – starting with registration to the filing of tax returns and payment of outstanding taxes through the Authority's website: www.tax.gov.ae