Excise Tax Advisory Services In Saudi Arabia

EXCISE TAX
ADVISORY IN
UAE & THE GCC

EXPERT CONSULTATION

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:

Category of Excise GoodExcise Tax Rate
Tobacco Products100%
Soft Drinks50%
Energy Drinks100%
Sweetened Drinks50%
E-Cigarettes100%
Liquids of e-cigarettes100%

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

ViolationPenalty
Failure by the taxable person to display prices inclusive of taxAED 15,000
Non-compliance with the requirements and procedures related to the transfer of excise goods in designated zones50% of the tax or shall not exceed AED 50,000
Failure to provide the authority with price lists for the excise goods produces, imported or soldAED 50,000 for the first time, and AED 20,000 in case the violation is repeated

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.

EXCISE TAX IN QATAR

  • Tobacco and derivatives
  • Carbonated Drinks
  • Energy Drinks
  • Special Goods; that are consumed under specific conditions and authorisations.

On 1 January 2019, the Qatar Excise Tax Law came into effect based on the Common Excise Tax Agreement of the States of the Gulf Cooperation Council. The implementation and administration of Excise Tax is under the supervision of the General Tax Authority (“GTA”) in Qatar.

Category of Excise GoodExcise Tax Rate
Tobacco and related products100%
Carbonated Drinks50%
Energy Drinks100%
Special Goods100%

Excise tax is applicable on businesses engaged in the following activities:

  • Import of excise goods 
  • Production of excise goods 
  • Operation of a tax warehouse used for produced or stored goods liable to excise tax.

The tax warehouse license is valid for a year and will require renewal on yearly basis.

Filing and payment for excise tax return is completed electronically; businesses applicable to excise tax required to submit an excise tax registration application through Dhareeba tax-portal.

Businesses need not to declare the amount of excise tax on the invoice but need to submit the price of the good including excise tax, quantity and description of the goods must be included.

The taxable person is required to file for excise tax return within 15 days following the end of each tax period which is the calendar year quarter.

The taxable person is required to maintain excise tax records, physical or electronic, for a period of at least five years following the end of the corresponding tax period to verify the excise tax calculation and payment accuracy.

Refund on excise goods is permissible in the following cases:

  • Export or re-export of excise goods that have been offered for consumption in Qatar
  • Excise goods already released for consumption in the country to be used in the production of other excise goods that are subject to excise tax
  • Excise goods that were released for consumption in the country and moved to another GCC country implementing excise tax

EXCISE TAX IN OMAN

  • Tobacco and derivatives
  • Carbonated Drinks
  • Energy Drinks
  • Sweetened Drinks
  • Pork products
  • Alcohol

In June 2019, the Oman Tax Authority (“OTA”) introduced the Executive Regulations regarding Excise Tax, its registration, compliance, and exemption of excise tax.

Category of Excise GoodExcise Tax Rate
Tobacco related products100%
Carbonated Drinks50%
Energy Drinks100%
Sweetened Drinks50%
Pork products100%
Alcohol100%

Businesses engaged in the following activities are required to obtain excise registration:

  • Imports excise goods into the country
  • Production of excise goods released for consumption in the country
  • Storage of excise goods in the country

The taxable person is required to file for excise tax return within 30 days following the end of each tax period, and to maintain excise tax records for a period of at least five years following the end of the tax period.

ViolationPenalty
Failure to file tax returnsRange from OMR500 – OMR5,000
Non-compliance with the rules and regulationsRange from OMR500 – OMR5,000
Failure to submit information requested by the AuthorityRange from OMR500 – OMR5,000
Obtaining refund of tax based on incorrect information or documents.Range from OMR 1000 – OMR10,000

EXCISE TAX IN BAHRAIN

  1. Tobacco and derivatives
  2. Carbonated Drinks
  3. Energy Drinks

In 2017, Bahrain signed the Common Excise Tax Agreement of the States of the Gulf Cooperation Council. The implementation and administration of Excise Tax is under the authority of the National Bureau for Revenue (“NBR”).

ViolationPenalty
Failure to file tax returnsRange from 5%-25% of the excise tax amount
Refrain from paying the tax due during the period specified by the regulation5% of the unpaid tax value for each month or part of it for which the tax has not been paid
Failure to submit information requested by the AuthorityBHD 5,000
Preventing in any form the Authority employees from performing their dutiesBHD 5,000
Non-compliance with the rules and regulationsBHD 5,000

Excise tax is applicable on businesses engaged in the following activities:

  • Import of excise goods 
  • Production of excise goods 
  • Storage of excise goods 
  • Release and transfer of excise goods 

It is mandatory for all importers and producers of any excise good to register for excise with the NBR to be allowed to engage in any excise good related commercial activity by submitting the declaration form.

Refund on excise goods is permissible in the following cases:

  • Excise goods that have been offered for consumption in the country in case of export or re-export for business purposes outside the territory of the the States of the Gulf Cooperation Council 
  • Excise goods used in the production of other excise goods that are subject to excise tax.
  • Excise goods that were previously offered for consumption and were subject to excise duty in the country and were later transferred or moved to another GCC country.
ViolationPenalty
Failure to file tax returnsRange from 5%-25% of the excise tax amount
Refrain from paying the tax due during the period specified by the regulation5% of the unpaid tax value for each month or part of it for which the tax has not been paid
Failure to submit information requested by the AuthorityBHD 5,000
Preventing in any form the Authority employees from performing their dutiesBHD 5,000
Non-compliance with the rules and regulationsBHD 5,000

Please visit this page for information on Excise Tax Advisory Services in Saudi Arabia

OUR TAX SERVICES

International Tax Services In Uae

INTERNATIONAL TAX IN UAE

M&Amp;A Tax &Amp; Reorganisations Services In Uae

M&A TAX & REORGANISATIONS IN UAE

Tax Investigations &Amp; Disputes Services In Uae

TAX INVESTIGATIONS & DISPUTES IN UAE

Asset Protection &Amp; Estate Planning Services For Hnwi In Uae

ASSET PROTECTION & ESTATE PLANNING FOR HNWI IN UAE

CALL US ON: +971 4 878 6240
or
WANT US TO CALL YOU BACK?
CONTACT US
Dubai+971 4 878 6240 Riyadh+966 56 865 2329