1. When will excise tax be effective from in the UAE?
Federal Decree-Law No. (7) of 2017 on Excise Tax has been issued and states that it comes into effect on 1 October 2017.
2. When will affected businesses be able to register to file excise tax returns and pay excise tax?
Businesses required to register for excise tax will need to apply to the FTA via an online system. Registrations for excise tax will open mid-September 2017.
3. Which goods will be subject to excise tax in the UAE?
The following goods will be subject to excise tax in the UAE at the following rates of tax:
- Carbonated drinks – 50%
- Energy drinks – 100%
- Tobacco – 100%
4. What value will excise tax apply to?
Excise tax will be applied to the retail selling price of the goods, at the rate applicable to the excise good in question e.g. excise tax will apply at a rate of 100% to the retail selling price of tobacco products.
Details on identification of retail selling price will be issued in due course.
5. Who will be required to register for excise tax purposes?
The following groups will be required to register for excise tax:
- Producers of excise goods.
- Importers of excise goods.
- Stockpilers of excise goods.
- Warehouse keepers responsible for excise goods.
Businesses that are required to pay excise tax will need to do the following:
- Register with the FTA;
- Submit excise tax returns on a monthly basis; and
- Pay the excise tax due on the same date as submitting a tax return.
6. What is a stockpiler?
A stockpiler is a person or business that holds a stock of excise goods for business purposes and cannot prove that excise tax has previously been paid on those goods.
If a business is not considered to be a stockpiler, it will not need to account for excise tax on goods owned after the introduction of the tax that were purchased before the introduction of excise tax.
7. When is excise tax due?
Excise tax is a tax on certain goods that are intended for consumption in the UAE. Tax is due when goods are ‘released for consumption’ i.e. when they enter free circulation in the UAE.
Excise tax is due when:
- Excise goods are imported into the UAE;
- Excise goods are released for consumption in the UAE (e.g. manufactured and released from a designated zone/excise warehouse etc); or
- Excise goods are acquired by a stockpiler, where tax has not previously been paid on those goods.
Excise tax is not a transaction-based tax, which means that goods do not need to be sold in order for the tax to be due.