FTA Cracks Down On Tax Evasion, Seizes Millions Of Non-Compliant Tobacco Products

The Federal Tax Authority (FTA) has ramped up its market oversight activities to combat tax evasion, protect consumer rights, and ensure adherence to tax laws. The FTA revealed that it conducted 40,580 field inspections through 109 campaigns in the first half of 2024. This marks a significant increase from the 17,310 visits through 105 campaigns during the same period in 2023.

Khalid Ali Al Bustani, Director-General of the FTA, highlighted the Authority's efforts to improve market oversight and prevent the sale of contraband products. He stated, "The Federal Tax Authority continuously strives to enhance rates of compliance with tax legislation and procedures, which clearly outline obligations for both the Authority and taxpayers, while ensuring full protection for consumers."

The FTA's inspection visits aim to ensure taxpayers comply with tax laws by issuing tax invoices for sales, displaying full prices inclusive of tax, paying due taxes on traded products, and identifying cases of tax evasion or other violations. These measures are crucial for maintaining a fair and transparent market environment.

Al Bustani also emphasized the importance of collaboration with federal and local entities to enhance inspection efficiency. "The Authority’s ongoing close collaboration with its strategic partners, including all relevant federal and local entities, is a key requirement for continuously enhancing the efficiency of inspection activities," he explained. These partnerships facilitate information exchange and access to advanced capabilities such as human competencies, logistical support services, and tracking systems.

Sara AlHabshi, Executive Director of the Tax Affairs Sector at the FTA, noted that advanced electronic monitoring processes are used during inspections. She said, "The inspection visits carried out by the Federal Tax Authority rely on advanced electronic monitoring processes to prevent the sale, trade, or storage of products that do not meet Excise or Value Added Tax obligations."

Inspection Campaign Results

The FTA's inspection campaigns have yielded positive results. In the first half of 2024, there were 6,210 violations detected compared to 1,740 in the same period in 2023. This represents a 256 percent increase in violations identified. Additionally, compliant establishments verified nearly doubled to 30,710 from 14,540 in H1 2023.

Regarding Excise Goods inspections across UAE markets in H1 2024 resulted in the seizure of 7.26 million non-compliant products compared to 8.89 million in H1 2023. This included 5.52 million packs of tobacco products found violating tax obligations versus 7.92 million packs seized previously.

Registration Notices Issued

Furthermore, there was an increase in registration notices issued to non-registered establishments failing to comply with their obligations. In H1 2024 alone saw 1,330 notices issued compared to just 573 during the same period in 2023.

AlHabshi continued by highlighting improvements driven by successful oversight efforts and awareness campaigns: "All indicators confirm that the inspection campaigns conducted by the Authority have achieved positive results." The number of compliant establishments verified roughly doubled indicating noticeable improvement levels.

The FTA remains committed to ensuring compliance with tax legislation through rigorous inspections and strategic collaborations aimed at protecting consumer rights while maintaining market integrity across all emirates.

With inputs from WAM