The Federal Tax Authorities in the UAE (FTA) issued clarification EXTP001 (the clarification) on scenarios requiring the return of Digital Tax Stamps (marks).
Article 6.3.1 of Cabinet Decision No. 42 of 2018 on Marking Tobacco and Tobacco Products provides that marks must be returned to the FTA where the person becomes aware that it no longer has the intention to use the marks for the purposes of affixing them to designated excise goods. The clarification provides that the FTA will interpret this provision broadly, and the cases where a person would be considered as no longer having the intention to use the marks will include (but not be limited to) the following:
- cease of business;
- cease of trade in a particular product line;
- wastage during the production process, e.g. when the marks are damaged during the process of applying them to products; and
- damage of marks outside the production process, e.g. when marks are damaged as a result of water leakage or fire.
The FTA requires that marks are physically returned to the authorized operator of the Digital Tax Stamps scheme on the FTA's behalf. However, the clarification specifies that where it is not possible to return the marks if they are damaged, destroyed or stolen, the FTA will require sufficient evidence to prove the marks are no longer in the person's possession due to those reasons.
Finally, the clarification provides that any person required to return marks must also report the return of the marks via the official Digital Tax Stamps system at the time the obligation to return the marks arises.