Understanding the amendment on Executive Regulation of Federal Decree-Law No. 7 of 2017 on Excise Tax: Cabinet Decision No. 108 of 2023

In a move to refine the implementation of the Federal Decree-Law No. 7 of 2017 on Excise Tax, the United Arab Emirates (UAE) has introduced a significant Cabinet Decision. Issued on November 6, 2023, and slated to be effective from December 1, 2023, a focus?? on Registration. This critical aspect of tax administration involves processes such as applications for tax registration, exceptions from tax registration, rejection of tax registration applications, tax deregistration, and warehouse keeper registration.

Application for Tax Registration

The cornerstone of the registration process lies in Article 3. Taxable persons, intending to engage in activities listed in Clause 2 of Article 2 of the Decree-Law, are required to follow specific rules and conditions. These include submitting a detailed application for tax registration, providing financial security as specified by the authority, and adhering to additional record-keeping requirements defined by the authority.

The authority commits to respond to the application within 20 business days of its receipt. The effective date of tax registration aligns with the initiation of activities, and the authority retains the right to revise the financial security value.

Furthermore, individuals obligated to apply for tax registration under Article 5 of the Decree-Law can alternatively seek registration as a warehouse keeper, subject to specific conditions detailed in Article 9 of this Decision.

Exception from Tax Registration

Article 4 introduces exceptions from tax registration, aiming to streamline the process for those not regularly importing or releasing excise goods from designated zones. The frequency of import or release—more than once in six months—defines regularity. However, a person exceeding four imports or releases within 24 months falls under the category of regularly importing or releasing excise goods. Exceptions can be revoked if there are changes requiring tax registration, with a 20-business-day notification requirement.

Rejection of the Tax Registration Application

In cases where the authority deems an applicant to lack the intention to conduct specified activities or fails to provide the required information, the rejection of the tax registration application comes into play. The authority must inform the applicant of its decision within 20 business days, but rejection does not preclude compliance with the Decree-Law. The rejected applicant can reapply when meeting the tax registration conditions.

Tax Deregistration

Tax deregistration, detailed in Article 6, involves a registrant applying to the authority within 30 days of no longer being responsible for tax (jus adding to your note ‘no longer responsible’ is critically explained in the amendment compared to before) The authority can also deregister the individual without a request in certain situations, ensuring the integrity of the tax system. Deregistration requires settling all due taxes, administrative penalties, and submission of necessary tax returns. The authority’s response time for deregistration applications is 20 business days.

Rejection of Tax Deregistration Application

Article 7 outlines cases in which the authority may reject a tax deregistration application, including if the applicant intends to resume activities within the next 12 months or fails to prove non-responsibility for due tax. Rejected applicants can be notified within 20 business days.

Tax Registration on the Introduction of Tax

Tax registration starts from the date specified by the authority. If a taxable person fails to notify the authority of their obligation to register, the authority can register them from the date the Decree-Law comes into force.

Warehouse Keeper Registration

Individuals operating or intending to operate a designated zone must apply for warehouse keeper registration, subject to conditions detailed in Article 9. The effective date aligns with approval by the authority or a date agreed upon with the applicant. The authority issues a warehouse keeper registration certificate with specific conditions for each designated zone.

Change of Circumstances of a Warehouse Keeper 

Warehouse keepers must notify the authority of any changes affecting their registration within 30 days. The authority can cancel registration with effect from the relevant event, and a response is expected within 20 business days. If a warehouse keeper applies for deregistration, duties must be fulfilled for the registered period. If the operation of the designated zone continues, a new registration form is required.

Conclusion

The Executive Regulation provides a comprehensive guide to excise tax registration, exceptions, rejection, and the regulation of Warehouse Keepers. Understanding these provisions is essential for businesses and individuals to ensure compliance with the tax laws of the United Arab Emirates. The intricate details of the regulation aim to create a transparent and fair tax environment while offering flexibility in response to changing circumstances.

Summary

The UAE’s Cabinet Decision No. 108 of 2023, effective from December 1, 2023, marks a pivotal step in refining the implementation of the Federal Decree-Law No. 7 of 2017 on Excise Tax. Focused on Registration (not only registration—focused on sensitive purview Excise goods dealings eg: export documentation, audit of records, etc), the decision outlines key processes, including tax registration applications, exceptions, rejection criteria, tax deregistration, and warehouse keeper registration.

With a commitment to transparency and compliance, the decision stipulates specific rules for taxable persons, exceptions based on import frequency, rejection scenarios, and the procedures for tax deregistration. Warehouse keeper registration adds another layer, emphasizing conditions and the authority’s role in overseeing designated zones. This decision underscores the UAE’s dedication to a fair and adaptable tax framework.

For understanding more about VAT Updates, Tax Law and Registration reach out to us on : contact@itc-tax.com | +971523205619

Follow us on: Instagram, Facebook, and LinkedIn.