FTA Conducts 2,707 Field Inspection Visits Aimed at Protecting Consumer Rights and Combating Tax Evasion
The Federal Tax Authority, FTA, has conducted more than 2,707 field inspection visits in cooperation with the competent authorities through 35 inspection campaigns across UAE markets in the first quarter of 2021, Q1-21, as part of its ongoing oversight efforts to protect consumer rights and increase the level of tax compliance.
FTA Director-General, His Excellency Khalid Ali Al Bustani, confirmed that the sophisticated, cutting-edge tools adopted by the Authority during inspections enable inspection teams to d accurately carry out their tasks through the latest field electronic mechanisms which correspond to best practices. This contributes to tightening controls on UAE markets to prevent the sale, circulation, and stockpiling of products that have not fulfilled their Excise or Value Added Tax (VAT) obligations.
H.E. Al Bustani said: “One of these tools is the ‘Marking Tobacco and Tobacco Product’ scheme, which went into effect on 1st January 2019 in implementation of the Cabinet Decision No. (42) of 2018, which specified the requirement to place DTS on cigarette packs and tobacco products, including water pipe tobacco and electrically heated cigarettes, after registering them in the FTA database. Each DTS contains data that can be read with a special device to make sure all taxes due on the products have been paid.”
H.E Al Bustani added, “The tax compliance rates that have been observed in the outcomes of the inspection campaigns carried out in the first quarter of 2021 highlight the success of the Authority’s oversight efforts carried out in cooperation with the competent entities. The Authority will continue intensifying its efforts to help businesses comply with tax procedures and systems, as the Authority regards them as strategic partners and looks to enhance their awareness and ability to self-comply.”
H.E. Al Bustani asserted the FTA’s commitment to protecting consumers from harmful products that do not meet the UAE’s regulations and standards and combating tax evasion through strict implementation of tax legislation and procedures, which clarify all mutual obligations between the Authority and taxable persons while ensuring complete protection of consumers through precise procedures, to tighten controls on UAE markets to ensure governance and transparency.
Sara Al Habshi, FTA Director of Tax Compliance and Enforcement Department stated that more than 256 of Value Added Tax violations were detected and 248 violations related to seizures in the category of ‘goods subject to Excise Tax’ during the first three months of 2021, with a total value of AED 74 million, comprised of 3.3 million cigarette packs and 58,200 kilograms of water pipe tobacco products that did not bear Digital Tax Stamps, DTS, in addition to a total of 1,316 electronic smoking devices that were not registered in the Authority's electronic system.
Sara Al Habshi noted: “During these inspection visits, other Excise Goods were found in violation of Excise Tax laws and amounted to more than 11,166 items, including carbonated beverages, energy drinks, and sweetened drinks.”
She continued: “The Authority’s compliance rate in the commercial establishments covered by the inspection campaigns carried out during the first quarter of 2021 exceeded 77%, reflecting the remarkable improvement in tax compliance rates in the UAE’s markets. The Authority will continue to conduct its inspection campaigns within the framework of actions carried out in cooperation with the competent entities to enhance tax compliance and reduce transactions that violate legislation and tax procedures, calling on those subject to taxes to adhere to the application of tax legislation to avoid penalties.”
Federal Tax Authority
By virtue of this Federal Law by Decree a public federal authority shall be established under the name of the Federal Tax Authority. The headquarters of the authority shall be located in the city of Abu Dhabi. The authority shall be in charge of managing and collecting federal taxes and related fines, distributing tax-generated revenues and applying the tax-related procedures in force in the UAE.
The authority shall be managed by a board of directors chaired by the Minister of Finance and a sufficient number of members to be appointed and remunerated by a Cabinet resolution, based on the chairman’s nomination. The authority shall have an independent annual budget that shall be deemed as public funds and exempted from all taxes and fees.