Skip to main content

Tag: Excise Tax in UAE

FTA Releases Cabinet Decision No. 108 of 2023 Amending UAE Excise Tax Regulations

Posted on by admin

Changes in UAE Excise Tax Laws: Cabinet Decision 108 of 2023 on Federal Decree Law No.7 of 2017 on Excise Tax

In a recent development, the United Arab Emirates Federal Tax Authority (FTA) revealed major revisions to the UAE Excise Tax structure through Cabinet Decision 108 of 2023. These amendments, marking a significant shift in the taxation landscape since its introduction in 201, have taken effect since last December 1, 2023.

The key changes in the amended regulation are as follows:

  1. Introduction of New Definitions:

The decision introduces new terms such as “Official Evidence,” “Shipping Certificate,” and “Commercial Evidence” to streamline the process of verifying the export of Excise Goods from the state. These changes are intended to enhance clarity and accuracy in record-keeping.

 

  1. Tax Registration:

The amendments emphasize that a rejected Tax Registration application does not exempt you from complying with UAE excise tax regulations. Businesses can reapply once they meet the Tax Registration requirements, ensuring continued adherence to regulatory standards.

 

  1. Tax Deregistration:

Under the new rules, the FTA has the authority to deregister businesses without a formal request from the taxpayer in certain circumstances, such as when the business is no longer liable for the tax or if maintaining the registration could compromise the integrity of the tax system. Article 6 has been amended to allow the Authority to deregister a taxable person without a request in the following conditions:

  • If the Authority determines that the person has ceased conducting activities, unless it is proven that they intend to resume these activities within the next six months, or
  • If maintaining the registration would harm the integrity of the tax system.

The FTA must notify businesses of deregistration decisions within five business days.

 

  1. Stockpiling:

The amendment in Article 11 stipulates that a taxable person’s entire stock of excise goods will be deemed ‘excess’ if audited records of stockpiled goods are not maintained. Businesses are now required to keep audited records of their excise goods from the effective date of the Decree-Law. Failure to maintain these records may result in the Authority considering the entire stock as excess excise goods, thereby making it fully taxable.

 

  1. Exemption for Release for Consumption:

Article 12 introduces the concept of ‘natural shortage.’ If a shortage occurs due to the natural characteristics of the goods and meets the standards and controls specified by the Authority, the shortage can be notified according to the approved mechanisms. Proper documentation must be maintained to prove the shortage. In such cases, the goods are not considered as released for consumption.

The provisions also outline exceptions to the release of Excise Goods for consumption, particularly in cases of natural shortages within designated zones. These ensure proper documentation, notification, and verification processes for businesses operating in these zones.

 

  1. Treatment of Designated Zone:

A new clause has been added to Article 15, treating a Designated Zone as if it were within the State if there are changes in operational mechanisms or violations of Designated Zone conditions. Additionally, the requirement to retain sufficient documentation on the value and quantity of excise goods subject to deficiency or shortage, or those that will be destroyed, has also been included in this article. Treating the Zone as within the State in case of operational changes or violations underscores the commitment to maintaining regulatory standards.

 

  1. Documents for Deductible Tax:

In practical scenarios, the Authority now allows the submission of a customs declaration and commercial evidence, or an Exit Certificate and official evidence, to prove the export of goods. However, the Authority retains the discretion to accept these documents and may specify alternative forms of evidence depending on the nature of the goods or exports. Clarifications regarding the considered payment of tax further support this framework.

The Authority has also clarified that rejection of tax registration or forced deregistration does not exempt a person from complying with the provisions of the law. This includes submitting another application for registration when the conditions are met.

Another notable amendment, effective from June 1, 2024, introduces the option for non-registrants to apply for a refund on excise goods exported directly or indirectly, upon fulfillment of certain conditions.

 

Tax Refunds in Special Cases:

New provisions establish conditions for tax refunds on direct and indirect exports by non-taxable persons conducting business. These provisions impose strict requirements, including physical exportation, payment evidence, and the retention of specific documents, to ensure the legitimacy of refund applications.

 

Conclusion:

Cabinet Decision 108 of 2023 reflects the UAE’s Federal Tax Authority’s proactive efforts to enhance the UAE Excise Tax framework. As businesses adjust to these changes, understanding the updated provisions is essential for compliance and risk mitigation. The transparent and detailed nature of the amended regulations contributes to a more straightforward and reliable taxation system in the UAE.

 

Summary of the Amendments to Executive Regulations of UAE Excise Tax Law

In conclusion, the recent amendments introduced through Cabinet Decision No. 108 of 2023 mark a significant shift in the regulatory landscape governing UAE Excise Tax in the UAE. These changes, effective from 1st December 2023, address key aspects such as definitions, tax deregistration criteria, stockpiling considerations, exemptions for goods release, treatment of Designated Zones, and documents required for deductible tax. 

The explicit provisions aim to enhance clarity, streamline processes, and ensure adherence to compliance standards. Taxable persons are urged to familiarize themselves with these updates, recognizing their implications for taxation and operational practices. As the regulatory framework evolves, the Federal Tax Authority continues to strive for a robust and transparent taxation system, promoting fairness and efficiency in the realm of UAE Excise Tax.

 The changes aim to bring more clarity to the taxation system, emphasizing compliance and transparency. Businesses are encouraged to understand these amendments to ensure continued adherence to regulatory standards in the UAE.

 

How Alliance Prime can help you in this new UAE Excise tax amendment?

Alliance Prime can provide support in reviewing the operations of your entity, ensuring compliance with the updated regulations in Excise Tax UAE.

For Queries and Support:
WhatsApp: +971 58 825 7795
Email: contact@alliance-acc.com

 

Excise Tax in UAE: Understanding the Basics of Indirect Tax

Posted on by admin

 

In the intricate landscape of the United Arab Emirates (UAE), businesses encounter various challenges, with tax compliance standing out as a paramount concern. Amidst the dynamic tax framework, two significant pillars, Value-Added Tax (VAT) and Excise Tax in UAE, play a pivotal role. This article delves into the realm of Excise Tax, shedding light on its fundamentals and exploring how businesses can benefit from the expertise of excise tax consultants, with a focus on Alliance Prime.

 

Understanding Indirect Taxes in the UAE

Before delving into the specifics of Excise Tax, it is essential to grasp the broader context of indirect taxes in the UAE. VAT, introduced in 2018, is a consumption-based tax applied to most goods and services. It is a responsibility that businesses bear throughout the supply chain, from charging and collecting to paying it to the Federal Tax Authority (FTA). The VAT landscape encompasses standard rates, zero rates, exemptions, and goods and services outside the VAT scope.

Excise Tax in UAE, implemented in 2017 and expanded in 2019, is another vital component of the UAE’s indirect taxation system. Often referred to as a “sin tax,” Excise Tax is levied on specific goods considered harmful to human health or the environment. These goods include tobacco and tobacco products, electronic smoking devices, energy drinks, carbonated drinks, and sweetened drinks.

 

Products Applicable for Excise Tax in UAE

Excise tax is a form of indirect tax levied on specific goods, typically those that are harmful to human health or the environment. Excise tax was introduced in the UAE in 2017, and it is currently applicable to the following good. The scope of Excise Tax includes, but is not limited to:

  • Tobacco and Tobacco Products: All items listed within Schedule 24 of the GCC Common Customs Tariff fall under the purview of Excise Tax.
  • Electronic Smoking Devices and Tools: Since 2019, Excise Tax is applicable to electronic smoking devices and the liquids used in such devices.
  • Energy Drinks: Any beverage marketed or sold as an energy drink, containing stimulant substances such as caffeine, taurine, ginseng, and guarana, is subject to a 100% tax.
  • Carbonated Drinks: All aerated beverages, except for unflavored aerated water, attract a 50% tax.
  • Sweetened Drinks: Introduced in 2019, sweetened drinks are subject to a 50% tax.

 

Businesses Obligated to Register for Excise Tax

Businesses engaging in the import, production, or stockpiling of excise goods, as well as overseeing excise warehouses or designated zones, are required to register for Excise Tax. Unlike VAT, there is no threshold for Excise Tax, necessitating registration for all entities involved with excise products.

 

Excise Tax Registration Process

Registering for Excise Tax in UAE is a crucial step for businesses, and the process is facilitated through the e-services section on the FTA website. The deadline for registration is imperative, and businesses must ensure compliance with excise tax regulations to avoid penalties.

 

The Role of Excise Tax Consultants

Given the complexity of excise tax regulations, businesses can benefit significantly from the services of excise tax consultants. Alliance Prime, a renowned accounting and tax consultancy based in the UAE, offers comprehensive excise tax solutions. Their services include excise tax registration, compliance management, and expert guidance to navigate the nuances of excise tax laws.

 

Excise Tax – UAE: A Closer Look

Excise tax is an indirect tax imposed on the sale of specific commodities. These goods are taxable if they are imported into the UAE, manufactured in the UAE, or stockpiled in the UAE. The primary purpose of the excise tax is to reduce the consumption of those particular goods to restrict unhealthy practices. In certain scenarios, goods will be physically labeled to show that the excise tax has already been paid to the government.

 

How Excise Tax in UAE Works

Excise tax in UAE is levied on the importer, producer, or stockpiler of excise goods in the UAE. The tax is calculated based on the value of the goods at the time of release for consumption.

There are two ways to pay excise tax in the UAE:

 

  • Monthly payment: Excise taxpayers can register for monthly payments with the Federal Tax Authority (FTA). Under this scheme, taxpayers are required to file a monthly excise tax return and pay the tax due within 15 days of the end of the tax period.
  • Quarterly payment: Excise taxpayers can also register for quarterly payments with the FTA. Under this scheme, taxpayers are required to file a quarterly excise tax return and pay the tax due within 30 days of the end of the tax period.

 

Excise Tax Registration Services

Excise Tax Registration Services are integral to ensuring that businesses maintain compliance with taxation laws, which undergo frequent changes and revisions. Companies like Alliance Prime provide these services to help businesses cope with changes, revisions, additions, and removal of tariffs. The UAE government introduced Excise Tax in 2017 on tobacco products, carbonated drinks, and sport or energy drinks. Two years later, in 2019, the government extended Excise Tax to e-cigarettes, soft drinks, and e-liquids. In effect, the Emirati government charges Excise Tax on goods that harm human health and the environment.

 

Excise Tax in UAE and Its Impact on Businesses

Businesses involved in the import of excise goods into the UAE, the production of excise goods released for consumption, the stockpiling of excise goods, or overseeing an excise warehouse have a responsibility to register for Excise Tax. The Federal Tax Authority (FTA) provides extensive support and guidance to assist businesses in fulfilling their compliance obligations. Failure to comply with Excise Tax regulations can result in audits and penalties imposed by the FTA.

 

Conclusion

In conclusion, Excise Tax in UAE is a critical aspect of the indirect tax landscape. Businesses must stay informed, comply with regulations, and seek professional assistance to ensure a seamless experience. Alliance Prime stands as a reliable partner, guiding businesses through the complexities of Excise Tax and contributing to their overall success. For more information and to enhance your Excise Tax compliance, visit Alliance Prime’s website: https://alliance-acc.com/.