Are businesses ready to tackle excise tax in UAE

Are businesses ready to tackle excise tax in UAE?

Welcoming the fourth quarter of the year, the Federal National Council implied the UAE excise tax, in the series of the various scheduled UAE taxes. Excise tax in the UAE is mainly applied on commodities that negatively impact the environment as well as health. Some of the products that are subjected to the UAE excise tax are tobacco, energy drinks, fizzy drinks, etc.  

These commodities are charged with taxes from 50 percent to 100 percent. UAE excise tax or the law regulating taxation projected by the government is set to create a revenue stream to boost the resources of the country. The good part is these resources will be used to strengthen, diversify and secure the nation’s economic development, leading to sustainable scope for the enterprises and businesses in UAE. 

Nevertheless, UAE excise taxes that are applied to manufactured goods and not saleable goods may directly or indirectly affect various businesses in UAE and the best measure to consider is to create awareness and understand the law thoroughly. 

Here are some of the questions that can help commercial entities and UAE businesses tackle excise tax in UAE: 

When was excise tax in the UAE introduced? 

According to the Federal Tax Authority, UAE Excise Tax will be introduced in the fourth quarter of 2017 and was to be applied from 1 October 2017.

Here are some of the questions that can help commercial entities and UAE businesses tackle excise tax in UAE:

When was an excise tax in the UAE introduced?

According to the Federal Tax Authority, UAE Excise Tax will be introduced in the fourth quarter of 2017 and was to be applied from 1 October 2017.

What is an Excise Tax in Dubai? 

In 2017, the UAE implemented an excise tax. Excise tax is an indirect tax imposed on certain commodities that are often damaging to human health or the ecosystem. These items are known as “excise goods.” 

Any aerated beverage, except for unflavored aerated water, is considered a carbonated drink. Any solutions, powder, fluid, or extracts designed to be converted into an aerated beverage are also labeled carbonated drinks. 

Energy drinks are defined as liquids that are promoted or sold as energy drinks and comprise stimulant ingredients that offer mental and physical stimulation, such as caffeine, taurine, ginseng, and guarana, among others. 

Any chemical that has the same or similar impact as the aforementioned substances is likewise included. All commodities listed in Schedule 24 of the GCC Common Customs Tariff are considered tobacco and tobacco derivatives.

How Much is the Rate of Excise Duty in the UAE? 

  • 50 percent on carbonated beverages 
  • 100 percent on tobacco products 
  • 100 percent on energy drinks
  • 100 percent on electronic smoking devices 
  • 100 percent on fluids used in such devices and tools 
  • 50 percent on any item with added sugar or other sweeteners 

Which Companies Should Register for Excise Duty in the UAE?

Any business engaged in the following activities must register for excise tax under UAE Federal Decree-Law No. 7 of 2017 on Excise Tax: 

  • The importation of excise items into the United Arab Emirates 
  • The manufacture of excise items for consumption in the UAE 
  • In some situations, anyone who is responsible for monitoring an excise warehouse, or authorized zone, such as a warehouse keeper, is accountable for stockpiling excise items in the UAE 

FTA is committed to assisting with this by providing broad support and guidance. The business, on the other hand, is responsible for ensuring that any applicable compliance duties are met. 

Which industries in the UAE excise tax applied on?

UAE excise tax is applied on specific trading products that are mainly considered bad for health and the environment or even on products that show negative effects in the body such as caffeine and aerated drinks. Nevertheless, tax marking of certain other goods will take place in the later stage.

Under what occasion will the UAE excise tax be chargeable?

Under the products listed – the manufacturing of those products, import, storage and logistics of the products and the release of the excisable goods from a particular jurisdiction could charge an excise tax in Dubai. However, export of excisable goods has an exemption, as well as there are several refunds you can apply for under the UAE Excise Tax Law.

Which commercial jurisdiction or zones will UAE excise tax be charged?

UAE provides jurisdiction benefits in the terms of free zones and offshores in UAE. Likewise, excise tax as well is charged in these jurisdictions neither on the manufacturing of excisable goods nor on storage or transportation between these jurisdictions. However, excise will be charged only when the goods that are distributed in the local market.

Is it essential to file returns on paying excise taxes in UAE?

It is mandatory to file returns on intervals as mentioned under the UAE Excise Tax Law and meet the deadlines and requirements according to the executive regulations. Also, the UAE Excise Tax Law guarded by the UAE Federal Law No. (7) of 2017 on Tax Procedures denotes several administration duties and penalties on tax evasion, that must be studied and followed duly.

Is your business ready to tackle the introduction to UAE excise tax? Or are you sure that excise tax will not be levied on your business, to find out speak to our professional business consultants at Shuraa Business Setup. Shuraa Business Setup is a leading business setup service provider and helps you through the various obligations and duties that come along with a business in UAE. For more details, drop in a quick inquiry or call us.