Posted on Oct 16, 2017
The law shall enter into force on 1 October 2017. The recently launched Federal Tax Authority website maintains a statement whereby Excise Tax will be introduced in the fourth quarter of 2017.
What is Excise Duty?
Excise, according to the Federal Court and Privy Council is a tax attracted by the event of manufacture but collected at some convenient stage which may be after the said event, which is only for administrative convenience.
It is a duty levied upon goods manufactured and not upon sales or the proceeds of sale of goods. Therefore the duty of excise is levied on a manufacturer or producer in respect of the commodities produced or manufactured by him. It is a tax upon manufacture of goods and not upon sales or proceeds of sale of goods. The UAE Government is levying excise tax to reduce consumption of unhealthy and harmful commodities while also raising revenues for the government that can be spent on beneficial public services.
Application of Excise Duty on Specific Goods -
Excise tax is a form of indirect tax levied on specific goods. These goods are typically those that are harmful to human health or the environment. These goods are referred to as “excise goods”. When considering whether a product is an excise good, the following definitions apply:-
Rate of Excise Tax -
The rates of excise tax in the UAE will be:
The FTA website includes definitions for carbonated drinks, energy drinks and tobacco products. It has been prescribed that the rate will not exceed 200%.
Exemption from Excise duty -
Products that are exported from the UAE shall be exempt from Excise Tax; other exemptions might be regulated in the Executive Regulations. Likewise the UAE Excise Tax Law provides for a number of refund cases. Designated Zones are defined as fenced free zones or any other area.Excise Tax shall be levied only where the excisable goods are released from these areas into the local market, i.e. Excise Tax is suspended while the goods are kept inside these areas, whether for manufacturing or storing purposes, and where goods are moved between two Designated Zones.
Tax Registration and Deregistration -
Registration for Excise Tax is generally required for entities that are involved in the manufacture, import or stockpiling of excisable goods for business purposes. The taxpayers will be able to deduct the Excise Tax paid for goods that are exported, goods that are used to manufacture other excise goods that will be subject to tax, and the Excise Tax paid by mistake from the Excise Tax due in each of the tax periods.
1. A Person shall be prohibited from conducting any activities that fall within clause (2) of Article (2) of this Decree-Law before registration thereof for Tax purposes in accordance with the provisions of this Article.
2. Without prejudice to the provisions of clause (1) of this Article, the Person liable for the Due Tax according to Article (4) of this Decree-Law shall apply to the Authority for Tax Registration as set forth in Federal Law No. (7) of 2017 on Tax Procedures, within 30 days as of the end of any month during which the Person carries out or intends to carry out activities mentioned in Article (2) of this Decree-Law, or from the effective date of this Decree-Law, whichever is later.
3. The Executive Regulation of this Decree-Law shall determine the effective date of the Tax Registration referred to in this Article.
Registering for excise tax is the responsibility of any business engaged in:
Registration as a Warehouse Keeper
1. Any Person operating or intending to operate a Designated Zone shall apply for registration as a Warehouse Keeper pursuant to what is specified in the Executive Regulation of this Decree-Law.
2. The Executive Regulation of this Decree-Law shall specify the effective date of registration referred to in this Article.
3. A Person shall not act as a Warehouse Keeper before his registration in accordance with this Article.
Excise Records To be maintained
Excise Tax taxpayers must comply with specific record keeping obligations, including -