16 Jan Excise Tax in UAE
What is Excise Tax- UAE?
Excise tax is an Indirect tax that is levied on specific products. It was introduced in 2017 and is levied on specific goods that are harmful to human health and the environment. This was introduced to reduce consumption of these products and increase government revenue that in turn is spent on public services.
The UAE Ministry of Finance has announced that excise will be applied on tobacco (100% rate), electronic smoking device (100%rate), energy drinks (100% rate), carbonated drinks (50% rate) and sweetened drinks. This has the potential to significantly reduce the consumption of such high sugar and harmful products.
How is a product categorized under excise tax?
There are mainly 3 categories of products which come under excise tax.
1. Carbonated drinks including any aerated beverage except for unflavored aerated water. Also considered in this category are any concentrations, powders, gels, or extracts planned to be prepared into an aerated beverage.
2. Energy drinks including any beverages which are marketed or sold as energy drink and contain stimulant substances that provide mental and physical stimulation. This includes, among others: caffeine, taurine, ginseng.
3. Tobacco and tobacco products and devices.
From 1 December 2019: Electronic smoking devices and tools, liquids used in such devices, and sweetened drinks have also been added to the excise taxes.
Business required to register
Under the UAE Federal Decree-Law No. 7 of 2017 on Excise Tax, registering for excise tax is the responsibility of any business engaged in:
• the import of excise goods into the UAE
• the production of excise goods where they are released for consumption in the UAE
• the stockpiling of excise goods in the UAE in certain cases
• anyone who is responsible for overseeing an excise warehouse or designated zone i.e. a warehouse keeper.
FTA is committed to providing extensive support and guidance to assist with this; however, the responsibility lies with the business to make sure that any required compliance obligations are fulfilled.
FTA has the power to conduct audits of taxable corporates and subsequently impose penal measures on those that do not comply with the law.
How to Register for Excise Tax in UAE?
Any individual involved in procurement, transfer, or stockpiling of the above-listed goods category has to register for excise tax. You need to complete the registration within 30 days of starting your business else a penalty can be levied on the firm. The individual or business cannot be a part of any transaction involving excise tax before registration and there is no threshold for registering.
Documents required for excise tax registration
You will need to provide the following documents before registration. The supporting documents required are:
• Passport copy
• Emirates ID
• Trade license
• Any other official records that entitle the business to administer activities within the UAE.
Business details required for registration are
• The role in which you are registering for excise tax (producer, importer, etc).
• Details of the excise goods with which the business is involved.
• Details of your Customs Authority registration, if applicable.
• If you are registered for excise tax in another GCC State, provide the TRN ( Tax Registration Number) for that GCC state.
You can follow these steps to register and apply for excise tax.
• Visit the official website of the FTA (Federal tax authority) and create a user name and password.
• Verify your email through the link sent to your registered email id.
• Now you need to login to your account through the email and password.
• Click on the Excise tax Registration for option on the website.
• Fill the form and click on submit.
After submission, the FTA (Federal Tax Authority) will notify you with your Registration Number. In case there is some issue FTA will ask for more documents or explanation so as to issue the registration number at the earliest.
Registration is as easy as creating an account on the FTA website. Click here for the complete guide for the registration process.
How can Averyx Group help you to comply with Excise Tax regulation?
Averyx is one of the leading tax consultant in U.A.E, which provide all types of service which includes VAT registration, VAT audit, VAT implementation and consulting, accounting and financial reporting, bookkeeping, updating your backlog accounts, account reconciliation services, financial statement audit, Sea & air import shipment clearance, main-land company setup, free zone company setup, business setup, etc. If you need any assistance when it comes to registration and compliance of excise tax, feel free to reach out to our experts.