Excise Tax Update in the UAE

UAE’s FTA introduced the anticipated Law 7 on Excise tax in August 2017. This excise tax is indirectly levied on explicit items during production, importation, and sale of about 50% – 100% to contribute to public services. In this article, we will see all the latest updates on excise tax in the UAE.

1.    New terms

The 3 new terms were introduced from December 1, 2023. Such terms aim to align the excise tax protocols with the UAE VAT regulations. These new terms are;

ü  Commercial Evidence

This term includes documents. These documents are provided by a shipping company or exporter. It supports the claim of exported goods. It may comprise;

• Invoices
• Sales contracts
• Bills of lading

There may be other commercial documents that validate the sale and shipment of the products outside the UAE.

ü  Shipping Certificate

Shipping Certificate refers to a document that is issued by a shipping transporter or cargo forwarder. This certificate helps to approve the transportation of the excise goods. It may include;

• Bill of lading
• Airway bill
• Details about the shipment and its end point

ü  Official Evidence

This new term introduced in 2023 as official documents refer to the documents that are issued by the government authorities of the UAE. This document verifies the export of excise goods from the UAE. It may include;

• Export declarations
• Customs clearance documents

2.    Excise Tax Registration

The next noteworthy update is that rejected Excise Tax applicants can now reapply for registration. Tax consultant Dubai ensures that businesses can avail multiple opportunities to stay compliant with registration obligations.

3.    Excise Tax Deregistration

FTA is now authorized to deregister a business. Such businesses usually have ceased their excise-associated activities for more than 6 months. This newly updated provision helps to keep an informed registry of active businesses.

4.    Natural Shortages

Excise goods that suffer natural shortages are no longer measured free for consumption if certain conditions are met. It may include;

• Shrinkage
• Moisture evaporation

This revision is applicable for manufacturers, especially for those who are dealing with tobacco products.

5.    Exports Exemption

There is also a revision that took place on December 1, 2023. It states that the documentation is now vibrant which is compulsory to claim exemptions for exporting excise goods. Exporters can rely on;

• Official documents of the UAE
• Documents authorized by authorities in end point countries

6.    Excise Goods Stockpiles

Businesses have to keep audited records for stockpiled excise goods. It is important to note that failure to maintain such records, the FTA may measure the whole stock in place of excess excise goods. It makes them fall under full excise tax.

7.    Deductible Excise Tax

The new provision comes into effect on 1^st December 2023, in which taxable persons can now claim deductions for excise tax waged on products exported beyond the UAE. Taxable persons can use the same documents essential for claiming exemptions. It is compulsory to know that the FTA may also require some other forms of evidence if your provided documents are not enough to complete the procedure.

8.    Excise Tax Refunds

The new provision comes into effect from 1^st June, 2024 states that unregistered businesses are now eligible to claim refunds for excise tax. This provision is a momentous change. The reason is that it extends eligibility for refunds to more businesses.

9.    Designated Zones

There is now a piece of important news for Designated Zones. FTA can now request financial assurances at the time of registration and during the alteration or renewal of a designated zone’s status. This assurance guarantees constant compliance with financial obligations during the working period.

It is important to note that it may be treated as part of mainland UAE for excise tax purposes if a designated zone is not able to meet the stated conditions.

Conclusion

Due to complications in the case of understanding the updates about the excise tax, it is important to get assistance from one of the top Tax advisors in Dubai such as Farahat & Co. Tax consultant in Dubai are well-informed about the latest updates about everything such as excise tax or corporate tax registration, fulfill the obligations, etc. Business tax consultant can make the path easier so businesses can handle all the complexities smoothly.