The Federal Tax Authority (FTA) has released new requirements as per Cabinets Decision No 52 of 2019 for Excise Tax in its updated Excise Tax User Guide. On the basis of the update in legislation, Excise Tax will be collected on the items starting from December 1, 2019:
- Sweetened Drinks
- Electronic Smoking Devices and Tools
- Liquids Used in Electronic Smoking Devices and Tools
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.
The Federal Tax Authority has launched a new electronic system for registering excise goods as part of its plans to continuously develop the tax system as a whole, and excise tax registration procedure in particular.
The FTA explained that the new system offers accurate and transparent procedures for registering excise goods with clear guidelines and standards in addition to the new reporting requirements related to excise tax returns and declarations.
The launch is aligned with the UAE leadership’s directives to enhance the country’s global competitiveness through continuous improvement of government services and ensuring accurate and transparent processes.
Registration procedures for excise
If businesses are the exporters of goods that are newly added to the list outlined above, you release such goods from excise tax designated zones or you expect to stock pile such products, you are required to register for excise tax before 1 Dec. if you fail to do so you will be prohibited form undertaking any activities relating to excise goods
Failure to comply will result in delays for the clearance of products through customs when entering UAE from 1 December 2019.
If any goods are not subject to excise tax, they should be registered as non-excisable with FTA on confirmation that they not subject to excise goods
If the goods have already registered at a rate of 0%, you are required to re-register the products accurate retail selling prices for the products, again declaring that the items were previously with FTA.
If the products were registered with FTA as non-excisable on the basis that the items were not subject to excise tax then they have to be re-registered as excise goods. As part of this process, it’s important to disclose that the items were previously registered as non-excisable.
If you expect to stock pile excise goods and are unsure whether the products you hold in stock have already been registered with the FTA, you need to confirm this from the importer or supplier of goods if they have already registered the products with FTA.
The FTA’s registration procedure for excise tax will be divided into two phases:
- First phase will be on registration of tax on sweetened drinks
- Second will be for registration of electronic smoking devices and liquids used in the devices.
Any business in the UAE dealing with excisable goods should check if they need to be registered with the FTA and required to file and pay excise tax. It is the responsibility of businesses to ensure that all regulatory requirements pertinent to excise tax are in place.
M A Farahat CPA, CFE, VAT Agent, Trademark Consultant
Years of experience: 30+ years
Specialty: VAT, Tax consultant, Real Estate Transactions, Labour & Business Setup, Trademark and IP, Fraud and Financial Crimes, Liquidation and Bankruptcy.
Mohammad Ali is Partner at Farahat & co. has worked extensively with SMEs and corporations on a variety of compliance issues. Since the introduction of VAT in UAE, he provides expert assistance on VAT accounting, VAT health reviews and recovering VAT from overseas transactions. With his work in taxation, he is extremely experienced with navigating complexities in tax reporting. taxation, he is extremely experienced with navigating complexities in tax reporting.
