Everything you Need to Know About Excise Tax Law in the UAE
13

May 2020

Excise tax is a type of indirect tax that applies to specific goods like tobacco products, caffeinated drinks and also on sugary drinks. Such goods are generally harmful to human health and also to the surrounding environment. These goods are categorized as “excise goods” and the tax applied to it is referred to as the excise duty. The excise tax was introduced in the UAE on 1st October  2017 by the Federal Tax Authority (FTA). Such a big step was taken bu the government of the UAE to reduce the consumption of the alcoholic beverage healthy and harmful intake.

The excise tax in the UAE plays a crucial role among all the GCC Countries. All the countries which are the member of the Gulf Cooperation Council signed a contract to implement various tax policies and to finally implement Value Added Tax. This contract was signed in the year 2017 and the time to implement the various tax decision was left to the government of the member country.

A complete tax-free economy is not considered healthy for the government. The higher global economic institutions like the International Monetary Fund (IMF) has suggested to these tax-free countries, to implement some tax as the system of a charge. This extra source of revenue will ensure that facilities such as affordable and quality education, health and infrastructure etc. are available to the public. By applying excise duty the government of UAE has taken an excellent step to ensuring the health of the citizen is maintained and has also generated a new source of revenue for the economy of the country.

The following substances are considered as excise goods:

  • Carbonated drinks 

Except for unflavoured aerated water, any aerated beverage is considered to be a carbonated drink. Any concentrations, gel, powder or extracts added to make an aerated beverage can be considered as a carbonated drink.

  • Energy drinks

It includes any beverage which can be considered as an energy provider or sold as an energy drink and containing stimulant substances such as caffeine, taurine, ginseng, and guarana. This substance provides mental and physical stimulation.

  • Tobacco and tobacco products

It includes all items listed within Schedule 24 of the GCC Common Customs Tariff.

Rate of excise tax

The rates of excise tax in the UAE will be:

  • 50 per cent for carbonated drinks
  • 100 per cent for energy drinks
  • 100 per cent for tobacco and related products

How to register for excise tax?

Excise tax registration can be done on the e-services section on the FTA website. By the following steps,

  • Sign up and create an account.
  • Verify all your details and then activate your account using the link sent to your registered email id.
  • Log in to the FTA portal using your credentials that have been sent to your account and navigate to the excise tax registration form.
  • Fill the form and check that all of the details that should be correct. Finally, click submit to send the form to the FTA.
  • After registering your profile, the FTA will notify you of your new Tax Registration Number.

Business details required for registration

A business needs to provide certain details so that it can get registered. These details are:

  • Details of the excise goods with which the business is involved.
  • The role in which you are registering for excise tax (producer, importer, etc).
  • Details of your Customs Authority registration, if applicable.
  • If you are registered for excise tax in another GCC State, provide the TRN for that GCC state.

After the registration, the business is charged the excise duty. There are two methods of charging excise duty.

Methods of Charging Excise Tax

Excise tax can be charged via any of the following methods:

1. Ad-Valorem Excise Tax

 The excise duty is charged based on a specific percentage on the value of the product.

2. Specific Excise Tax

The specific excise tax is charged by quantity, irrespective of price or weight.

Documents Required for Excise Tax Registration in UAE

The documents required for excise tax registration are:

  • Trade license
  • Information related to business activity
  • Bank account details
  • Emirates ID
  • Declaration
  • Articles of Association
  • Certificate of Incorporation
  • The custom number issued by the custom department
  • Passport of manager, owner, and senior management
  • Authorized signatory documents
  • Partnership agreement

Who We Are

JAXA Chartered Accountant is the world-class business expert in the financial matters of the business who would help your business to get excise tax certificate and initiate your business regarding excise goods. Some of the services which JAXA provides are accounting services, auditing services, VAT registration, and taxation services. Contact us to get more information regarding our company and the services for hassle-free business incorporation in the UAE.