Excise Tax in UAE

Importers, producers, Stock pilers, warehouse keepers, etc. that deal with electronic smoking devices and liquids that are used in such tools along with sweetened drinks need to register to Excise Tax system. Failure in registering within the specified period can lead to fines and various other obstacles.

Importers, producers, Stock pilers, warehouse keepers, etc. that deal with electronic smoking devices and liquids that are used in such tools along with sweetened drinks need to register to Excise Tax system. Failure in registering within the specified period can lead to fines and various other obstacles.

Purpose of Excise Tax

As per Federal Tax Authority (FTA), excise tax will also apply on additional products to brace UAE government’s efforts to promote healthy consumption and environment. Excise tax is levied on the products that are harmful and dangerous for the human health and environment. The purpose of implementing excise tax is to reduce or avoid the consumption of unhealthy products, simultaneously increasing the government revenues that can be used for the development and pubic services.

How will it affect consumers?

Consumers will need to pay more for goods that are harmful to human health or the environment.

How Berkeley & Lords can help in implementing Excise Tax in UAE?

Berkeley & Lords is providing following services that will help your business to implement excise tax in your operations smoothly and efficiently.

1. Excise Tax Registration
2. De-registration from Excise Tax
3. Quick review on the Entity to identify the product listing and classification for qualifying registration
4. Advise on stock/ inventory counting and duty calculation
5. Advise on stockpilers
6. Ongoing Excise duty return filing and compliance services
7. Tax Agent
8. Excise duty consultancy on latest amendments/updates from FTA

Business Implementation of Excise tax in UAE

Excise Tax in UAE brings a change to all business that manufacture, trade and import those products.
Businesses must register in excise tax system and implement excise tax in their activities. We recommend to start considering the following steps for guidance:

Identify the products that will qualify as Excise Goods

Review the supply chain flows/transactions with regards to the newly identified Excise Goods, and determine the Tax trigger points and the Tax liability for each flow/transaction;

Determine key requirements for registration as an Excise Tax Taxable Person;

Determine key requirements to apply for a Tax Warehouse and Tax Warehouse Keeper registration (if applicable);

Calculate excess Excise Tax (if any) during the transitional period;

Assess the impact on pricing across the supply chain.

Stockpile Audit

The authorities had announced that as of 1 October 2017, Excise Tax would be in full effect. Because the Nation introduced the Excise Tax, it will allow companies and corporate houses to be more transparent to take charge of the stocks they keep of the products protected by the Excise Tax Act.

Employing a stock auditor will be a more practical choice for companies. They can monitor and test the quality of the goods moving in and out during business transactions.

Stock is one of the main assets which will result in a company making a profit or loss. Any carelessness or miscalculation in cash-involving transactions may become counterproductive to the industry’s survival. With the Excise Tax in the picture, companies dealing in Excise Goods need to monitor their accounts very carefully and keep them up to date. In addition to this specific provision, Article 24 of Federal Decree-Law No. (7) allows businesses to keep records of all Excise products made, imported, exported, and processed, as well as stock rates records of the stock level along with the details of the damaged goods.

A stock audit includes a physical inspection of the products available in their warehouses with the company. Besides, the stock audit includes, within its scope, the following acts to ensure:

  •  In the account books, the stock value supports the interest.
  • Proper stock-storage
  • If the creditor holds stock and is made eligible for funding.
    If the stock is graded carefully and accurately in various categories.

An experienced team that is highly trained experts and auditors, Berkeley & Lords, one of the most excellent auditors can help you test stock record quality and comply with the Authority’s standards and regulations to escape penalties. Besides conducting an audit of stocks for your company, We – the Berkeley & Lords will provide you with expert insight into the numerous issues and questions related to the UAE’s newly imposed tax – the excise tax and VAT.

Our Auditors and consultants are one of UAE’s leading auditors who conduct internal and regulatory audits and provide their clients with stock audit facilities.

Excise Tax Registration UAE

Businesses which import, manufacture, distribute, or stockpile the following Excise goods should already be registered for Excise Tax and should be giving consideration to the new compliance requirements:

  • Carbonated Beverages
  • Energy Drinks
  • Tobacco and Tobacco Products

Businesses can register for excise tax in UAE through the e-services portal of Federal Tax Authority (FTA) website. There is no registration threshold for excise tax, any business who is involved in any of the activities mentioned above must register and implement excise tax.

Excise Tax Rate in UAE

Federal Tax Authority (FTA) has announced that UAE will implement 100% excise tax on tobacco products and 50% excise tax on electronic smoking devices and the liquid used in the electronic smoking devices. FTA has recently introduced a new excise registration procedure and has called concerned businesses to register their products on the FTA’s new excise portal. Excise tax will apply as follows:

  • 50 per cent excise tax on carbonated drinks
  • 100 per cent excise tax on tobacco products
  • 100 per cent excise tax on energy drinks
  • 100 per cent excise tax on electronic smoking devices
  • 100 per cent excise tax on liquids used in such devices and tools
  • 50 per cent excise tax on any product with added sugar or other sweeteners.

Excise Return Filing

The FTA is committed to providing comprehensive resources and advice to help with this, however, the duty is on the organization to ensure that all necessary regulatory requirements are met.

 

The FTA conducts audits of taxable businesses and imposes disciplinary action against those who do not comply with the legislation.

 

The due date to file your Excise Tax Returns is the 15th day of each month.

 

The taxable person will carefully check the details in the report and ensure their accuracy before filing. He will then file the Excise Tax Return and pay the Excise Tax in full.

Excise Declaration

Federal Tax Authority wants all the Warehouse keepers of one or multiple Designated Zones to appoint a certified external auditor to audit the Opening Stock as of 1st January in each Designated Zone per Excise Tax Registrant. Submit audit report before filling in the Opening Stock Declaration Form.

Deadline to submit the Opening Stock Declaration: 31st January 2021

Implications:
1. Failure to submit an Opening Stock Declaration will set the stock held in the Designated Zone to be zero (0), which will restrict you from moving stock out of a Designated Zone.

2. Variances in Opening Stock Declarations may lead to administrative penalties or Excise Goods being considered as released for consumption.

Excise Tax De-Registeration

A registered individual may request that the tax authority discontinue the registration of excise tax if he is no longer liable for excise tax as provided for in the law. This is deregistration.

 

Who Has to Apply for Excise Tax De-Registration in the UAE?
When the taxable individual ends taxable practices such as importing, manufacturing or stockpiling excise products in the UAE. The taxable person may de-register via the online portal by filling in the De-Register application form. He should determine the date from which to de-register the Taxable individual.

Deregistration shall occur within 30 days of the date a registered individual ceases to make taxable supplies.

According to the rules of the statute, the authority shall respond to the request for deregistration within 20 business days of receiving the letter.

To conclude the deregistration, the claimant must pay all tax payments in compliance with the statute, along with the tax returns. The claimant shall also be responsible for the amount of all civil fines payable at the time of deregistration.

 

What are the Conditions & Procedures for Excise Tax Deregistration?

  • All tax return applications (including final tax returns) and the collection of taxes and fines must be revised by a taxable individual. The final tax return will be filed, and the tax due will be paid in 15 days from the close of the calendar month, of which the final tax return is included.
  • Confirm and apply all four Approved Signatory Declarations (through the Dashboard web portal).
  • Calculations of products to be held on 1 October 2017 (Excel file and PDF document signed and stamped by Tax Officer or External Auditor)
  • Letter of undertaking stating that the claimant does not wish to require the importation, sale, and release of excise tax products from the specified region.
  • When the FTA announces acceptance of your application for deregistration, you will be informed of the “Pre-approval withdrawal” letter. Your deregistration status in the dashboard is updated to ‘Pre-Approved
  • You will also request a final tax return that will be produced by the program in the segment “VAT returns.” You will receive an email and an SMS message reminding you of the application’s status and inviting you to complete the pending liability charge.
  • When you have made the invoice, go to the dashboard and press the Deregister button to complete the Deregistration transaction against the Excise Tax file.
  • When you have a credit balance pending with FTA at the time of deregistration, you will have to apply first for a refund. When FTA accepts the return, FTA must review the claim for deregistration.

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