EXCISE TAX
ADVISORY IN
DUBAI, ABU
DHABI & THE UAE
Our Excise Tax advisory service in Dubai, Abu Dhabi and the UAE is part of our tax consultancy services in Dubai, Abu Dhabi and the UAE.
Excise Tax is an indirect tax set on specific goods; it is imposed within government policies rather than being an international tax imposed across countries. It is primarily considered as a business tax; a tax paid by the businesses; producers, importers, or an intermediary; and not by the consumer although it usually induces an indirect increase in price for consumers. It can be set and paid as a fixed percentage rate assessed on the value of certain goods referred to as “ad valorem” or as a specific fixed amount.
Excise tax is typically imposed in the country where and at the time when the excise goods are consumed; applied on the retail price affecting the price of the excisable goods for final consumers; thus, referred to as a consumption tax.
WHO IS EXEMPT FROM PAYING EXCISE TAX?
- Diplomatic and consular bodies, international organisations, and heads and members of diplomatic and consular corporations.
- Excise goods brought in by travellers entering the country provided that these goods are of non-commercial use, and they are within the allowance specified in the Customs Law.
- Excise goods sold in departures Duty-free shops and onboard consumption.
TYPES OF EXCISE GOODS IN UAE
- Tobacco related products.
- Soft drinks.
- Energy drinks.
- Sweetened drinks.
- Electronic devices and tools related to smoking, vaping and similar activities.
- Liquid consumed in electronic devices used in smoking, vaping and similar activities.
WHAT IS THE EXCISE TAX RATE IN UAE?
In 2017, United Arab Emirates has released its excise tax regulations and rates in aim to reduce consumption of unhealthy commodities while also inducing revenues for the UAE government to be spent on beneficial public services. The implementation and administration of Excise Tax is under the authority of the Federal Tax Authority (FTA).
All businesses that engage in trading and production of the below excise goods are subject to the following excise tax rates:
Excise tax is applicable on businesses engaged in the following activities:
- Import of excise goods.
- Production of excise goods that are consumed in the country.
- Hold a stock of excise goods for business purposes in the country.
- Release of excise goods from a designated zone.
PAYMENT OF EXCISE TAX
Filing and payment for excise tax return is completed electronically only through the FTA portal.
The taxable person is required to file for excise tax return within 15 days following the end of each tax period and submit the applicable declaration form from the below list:
- Excise Tax import declaration form.
- Excise Tax production declaration form.
- Excise Tax release from designated zone not requiring customs clearance declaration form.
- Deductible Excise Tax declaration form.
The taxable person should check the information provided prior to submission, and then submit the excise periodical returns, pay the excise tax liability 15 days after the end of the calendar month, and maintain excise tax records.
In case a taxable person files an excise return, and the value of the deductible tax exceeds the value of excise tax payable, then the taxpayer is entitled to apply for a refund of the excess refundable tax.
VIOLATION OF DISCLOSURE OF EXCISE TAX
EXEMPTIONS FROM EXCISE TAX
On 21 June 2022, the Federal Tax Authority announced a Public Clarification EXTP007 on excise goods, which states the scenarios where relief from excise tax can be granted for excise goods within an excise tax designated zone that are found to be deficient, have shortage in their quantity, considered to be wastage of excise foods, or goods that were intended to be destroyed.
However, relief from accounting for, filing and payment of excise tax on goods will be granted where the following scenarios stand, and the taxable person follows and is in-compliance to the process outlined by the Federal Tax Authority.
For destroy and disposal of excise goods, the taxable person is required to first obtain an approval from the Federal Tax Authority and provide sufficient proof and explanation to the reason the goods need to be disposed. The authority may require inspecting the goods prior to granting the approval.
Whereas for deficiency, shortage, and wastage of excise goods; the relief will be granted when the warehouse keeper notifies the Federal Tax Authority within 30 days of discovering the deficiency in, shortage and wastage of the excise goods, along with a sufficient proof of the circumstances leading to the deficiency, shortage or wastage. The authority may provide approval subject to a legitimate cause such as natural shortage and wastage, shortage and wastage during production or force majeure.
