Issue
The FTA has implemented a Digital Tax Stamp ("DTS") regime which requires the marking of certain excise goods with a physical and digital marker – also referred to as marks. The purpose of the mark is to validate authenticity of excise goods, as well as to track and trace the goods throughout the supply chain in order to verify whether tax has been paid on those goods.
Cabinet Decision No. 42 of 2018 on Marking Tobacco and Tobacco Products includes a number of scenarios where marks must be returned to the FTA. This public clarification provides further guidance on certain practical scenarios likely to be faced by manufacturers dealing with the application of marks to tobacco and tobacco products.
Summary
In certain cases, persons in possession of DTS marks will be required to return those marks to the FTA. In practice, this will be achieved by physically returning the marks to the appointed operator of the DTS scheme to manage on behalf of the FTA, which is currently De La Rue.
Where there is a requirement to physically return marks, the return should also be reported to the FTA via the DTS system.
Detailed analysis
When should marks be returned to the FTA?
Article 6(3) of Cabinet Decision No. 42 of 2018 sets out the following scenarios when marks should be returned to the FTA:
1. Where the person becomes aware that he no longer has the intention to use the marks for the purposes of affixing them to designated excise goods;
2. Where a period of 12 months has passed since the person received the marks and those marks have not been affixed to designated excise goods; and
3. Any other circumstances as specified by the FTA.
Change of intention with regards to the use of DTS marks
One of the scenarios in which marks must be returned includes when the person becomes aware that he no longer has the intention to use the marks for the purposes of affixing them to designated excise goods.
The FTA will interpret this provision broadly to mean any scenario in which the person knows they will no longer have the ability or intention to use the marks.
Such scenarios include, but are not limited to, the following: