EXCISE SERVICES

What Is Excise Tax

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.

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Excise Registration 

Excise tax registration in UAE is mandatory for the businesses that import, produces, or stockpiles excise goods or release them from a designated zone in the UAE. Excise tax is the responsibility of every business that is engaged in the following activities:

  • 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.
  • The release of excise goods from a designated zone.

The company must register within 30 days after either the commencement of business or the effective date of the law, whichever is earlier. They cannot be a part of any transaction involving excise goods until they have registered for excise tax in the UAE. There is no registration threshold for excise tax.

A registered individual can apply to the tax authority to discontinue the excise tax registration if he is no longer liable for excise tax as per provisions of the law.

In order to deregister within 30 days from the date when he no longer has a taxable supply, a registered individual shall inform the Authority too. According to the rules of the statute, the authority shall respond to the request for deregistration within 20 business days of receiving the letter.

ITC makes sure that the company’s supporting documents, and declarations on the FTA portal are all in compliance with the UAE tax law, standards and reporting timeliness is an important requirement in increasing into a new territory. With the changes taking place at a faster rate in the tax and accounting legal guidelines within the UAE, it may be hard for companies to stay up to date both to the legal guidelines as well as their application in tax filing and compliance strategies.

Advisory services Our team would provide training to the staff members of the taxable person with reference to a tax audit so that they are prepared in case of a tax audit in the future as Organizations require reliable business valuations to underpin transactions that are related to Excise Tax. It is essential that boards, shareholders, traders, financiers, transaction counter events and regulators can depend upon the soundness of valuations.

ITC makes sure that the company’s supporting documents, and declarations on the FTA portal are all in compliance with the UAE tax law, standards and reporting timeliness is an important requirement in increasing into new territory. With the changes taking place at a faster rate in the tax and accounting legal guidelines within the UAE, it may be hard for companies to stay up to date both to the legal guidelines as well as their application in tax filing and compliance strategies.

Any registered entity that imports, produces, or stores excisable goods can suspend or defer the payment of excise tax by preserving the goods in an excisable designated zone. A designated zone is treated as being outside the UAE for the purposes of excise tax. Designated Zone refers to ‘any fenced area intended to be a Free Zone that cannot be entered or exited except through a designated road and any area designated by the FTA as being subject to the supervision of a Warehouse Keeper’.

As part of the WarehouseKeeper registration process, each individual must register for a Designated Zone. The FTA may specify certain conditions regarding the operation of a Designated Zone during its approval process which includes the level of physical security required, the type of access that may be granted to designated zones, the checks that the Warehouse Keeper must make, etc.

Businesses dealing with excise goods can use a Registered Designated Zone to defer payment of Excise Tax until the goods are removed from or consumed within the Designated Zone. Specific provisions have been defined by the authority for Designated Zones.

TOBACCO PRODUCTS

Tobacco and tobacco products shall include all items listed within Schedule 24 of the GCC Common Customs Tariff that are imported, cultivated or produced in the State, including electrically-heated cigarettes.

  • Chewable Tobacco
  • Dokha
  • Rolling Cigarettes
  • Tumbak
  • Electrically Heated Cigarettes
  • Homogenized or Reconstituted Tobacco
  • Cigar
  • Other Tobacco Products
  • Cigarillo

 

SWEETENED DRINKS

Sweetened drinks that come under excise tax include any product to which a source of sugar or sweetener is added and is produced either as:

  • A ready to drink beverage or concentrates, powders, gel, extracts or any other similar product that can be made into a sweetened drink.
  • Source of sugar includes white sugar, soft white sugar, powdered sugar, soft brown sugar and glucose syrup. Whereas sweeteners include saccharin and its salts, aspartame, sorbitol, and neotame.

Sweetened drinks that are excluded from Excise Tax:

  • Ready to drink beverages that contain at least 75% milk or its substitute
  • Baby formula, follow up formula or baby food
  • Handling of Foods for Special Medical Purposes consumed for special dietary needs

ELECTRONIC SMOKING DEVICES

Electronic smoking devices and tools shall include all electronic smoking devices and tools and the like, whether or not containing nicotine or tobacco. which would be classified on import under Customs HS codes like 85437031, 85437039, etc.

All liquid used in electronic smoking devices and tools used in such devices even if they contain nicotine or not will be levied tax under Customs HS code 38249999.

A Voluntary Disclosure1 is a form provided by the Federal Tax Authority (“FTA”) pursuant to which the Taxpayer notifies the FTA of an error or omission in a Tax Return, Tax Assessment or Tax Refund application.

There has several instances of rejection of applications due to improper application filed by taxpayers. ITC Tax Consultancy Services has assisted numerous clients in filing Voluntary Disclosure form. Our team of Excise experts guide you throughout the process and also after the application is submitted.

UAE Excise reconsideration form is available on the FTA website. Businesses can submit VAT reconsideration online. If you wish to submit a reconsideration form about any decisions made by FTA then you must submit the application and any supporting documents.
ITC Tax and Accounting consultancy have been helping clients for all process, consult us .

The excise goods that will be charged tax
in the UAE include

Any products that fall under Schedule 24 of the GCC Common Customs Tariff, including electrically-heated cigarettes, will be categorized as tobacco and tobacco products. These products include:

  • Chewing tobacco

  • Cigars

  • Cigarettes

  • Cigarette rag

  • Cigarillo

  • Expanded tobacco

  • Hand rolling tobacco

  • Herbal smoking products

  • Reconstituted tobacco sheets

  • Snuff

This includes any aerated beverage and any concentrations, powder, gel, or extracts intended to be made into an aerated beverage. Unflavored aerated water is exempted.

Any beverages which are marketed, or sold as an energy drink, and contains stimulant substances that provide mental and physical stimulation or includes caffeine, taurine, ginseng and guarana, will fall in this category. Substances that have similar effects as the ones mentioned above and any concentrations, powder, gel or extracts intended to be made into an energy enhancing drink will also be levied tax.

Electronic smoking devices and tools shall include all electronic smoking devices and tools and the like, whether or not containing nicotine or tobacco. which would be classified on import under Customs HS codes:- 85437031, 85437032, 85437039

All liquid used in electronic smoking devices and tools used in such devices even if they contain nicotine or not will be levied tax under Customs HS codes:- 38249999. Electronic smoking devices,liquids used in this devices and tools will be charged 100 percent tax.

Sweetened drinks that come under excise tax include any product to which a source of sugar or sweetener is added and is produced either as:

A ready to drink beverage or
Concentrates, powders, gel, extracts or any other similar product that can be made into a sweetened drink
Source of sugar includes white sugar, soft white sugar, powdered sugar, soft brown sugar and glucose syrup. Whereas sweeteners include saccharin and its salts, aspartame, sorbitol, and neotame.

Sweetened drinks that are excluded from Excise Tax :
Ready to drink beverages that contain at least 75% milk or its substitutes
Baby formula, follow up formula or baby food
Handling of Foods for Special Medical Purposes consumed for special dietary needs
Beverages which include alcohol

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