Excise Tax UAE
The UAE government introduced an excise tax on carbonated drinks, tobacco products, and energy drinks in 2017 and has decided to charge the same on e-cigarettes, e-liquids, and several soft drinks, commencing from December 1, 2019.
Excise tax is levied on specific goods that are harmful to human health or the environment. The UAE Government is levying excise tax to reduce consumption of unhealthy and harmful commodities, simultaneously raising government revenues that can be used for public services.
Services offered by ITC
- Registration for excise tax in UAE
- Quick review on the Entity to identify the product listing and classification for qualifying registration
- Advise on stock/inventory counting and duty calculation
- Advise on stockpiles
- Ongoing Excise duty return filing and compliance services
- Tax Agent
- Excise duty consultancy on latest amendments/updates from FTA
The excise goods that will be charged tax in the UAE include
Excise Tax Rates
- 50 per cent for carbonated drinks
- 100 per cent f or tobacco products
- 100 per cent for energy drinks
- 100 per cent on liquids used in electronic smoking devices and tools
- 100 per cent on electronic smoking devices
- 50 per cent on any product with added sugar or other sweeteners.
What Business Needs to do
The Federal Decree-Law No. 7 of 2017 on Excise Tax stipulates that businesses/ persons that are engaged in any of the below activities must register for tax;
- Importing of excise goods;
- Production of excise goods;
- Releasing goods from an excise tax designated zone;
- Stockpilers of excise goods, in certain cases; and
- Warehouse keepers, in certain cases.
Hence accordingly Importers, producers, stockpilers warehouse keepers, etc. of electronic smoking devices, liquids used in such devices and sweetened drinks need to register for excise tax system as soon as possible. Failure in registering within the specified time period can lead to fines and various other obstacles.
Stockpiles are that businesses that holds excise stock on which duty is not paid and it’s available for free circulation in UAE and intends to be sold in UAE and holds “Excess excise goods”. FTA has a prescribed method to calculate excess excise goods and their valuation. Most of the supermarkets and retailers may fall under this category.
A step-by-step guide for businesses
- Classification of Goods – Identify the Excise Goods
- Identify the primary conditions for registration as an Excise Tax Taxable Person and if applicable, as a Tax Warehouse and Tax Warehouse Keeper
- Identify the tax trigger points and the tax liability for flow/transaction after going through the supply chain flows/transactions with regard to the Excise Goods
- If there is any additional excise tax during the transitional period, this must be calculated.
- Evaluate the pricing impact across the supply chain
- Valuation for Excise tax
- ERP and process readiness