What you need to know about Excise Tax in UAE
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May 2020

Taxation may seem cumbersome to many people, but it has its own benefits. It is a way for the government to generate revenue on its own, which could be utilized in the development of civic amenities and helping the population of the country. With the increasing population in the world, having a separate source of revenue is very important for any country.

In the United Arab Emirates, one can find a special kind of tax called the Excise Tax. The UAE is famous for having no taxes making the country a haven for people in business and entrepreneur but if a person is conducting in the import, export, manufacturing or trading of certain goods which can be harmful to the people using it, this tax will apply to them.

Here is all you need to know about Excise Tax in the United Arab Emirates

 About Excise Tax

The Excise Tax is a form, of an indirect tax that is levied on a number of goods and services which can be considered as harmful to the health of a human or the surrounding environment in the long run. This tax was introduced in the year 2017 with the intention to make the products costlier, which will prevent people from using these products.

This tax is levied on the goods which are called as “Excise Goods”. These goods include:

1.Carbonated Drinks

Carbonated drinks include any aerated beverage or aerated and flavored water. It also adds to any concentrations, extracts, gel or any powder which can be used to prepare any aerated beverage.

2.Tobacco and Tobacco products

Schedule 24 of the GCC Common Customs Tariff mentions all the items which are included under goods which consist of tobacco.

3.Energy Drinks

Energy drink will include any beverage which will be consisting of Ginseng, Caffeine, Taurine and/or Guarana. These energy drinks will also include any such concentrations, gels, powders, extracts, etc. which will be converted into an energy-enhancing drink and will be sold to the common public with this intention.

With the recent obesity epidemic all across the globe, the government of the United Arab Emirates decided that from the 1st of January 2019, Excise Tax will also apply to the following products:

  • Drinks which contain artificial sweeteners and other Sugar-Sweetened Beverages
  • Vapes or any kind of electronic smoking devices or tools
  • Any kind of liquid which are utilized in such methods or tools

The term “Sweetener” will include any type of sweetener which includes but is not limited to the use of Aspartame, Acesulfame, Potassium, Steviol Glycosides, Saccharin, and various other artificial sweeteners.

“Sweetener” includes any type of sweeteners as determined under Standard 995 of the GSO. Such sweeteners include, but are not limited to Aspartame, Sucralose, Acesulfame Potassium, Saccharin, and Steviol Glycosides.

There are certain products that are excluded from the purview of the excise tax in the United Arab Emirates. It includes:

  • Ready to drink Beverage (consisting of 75% milk or milk substitute)
  • Baby food and Baby Formula
  • Beverages consumed under special dietary needs
  • Beverages consumed for medical use

Which businesses need to register for Excise Tax?

The government has provided specific criteria that need to be fulfilled by a company in order to be eligible to register for Excise Tax. According to the UAE Federal Law Decree-Law No. 7 of 2017 on Excise Tax, any business which conducts business in any of the underlying activities needs to register for Excise Tax:

  • Import of the Excise Goods into the country
  • Stockpiling of Excise Goods in the UAE
  • Production of Excise Goods in the UAE (the produced goods should be available to the general public for consumption)
  • The entity responsible for an Excise warehouse

The business which needs to register should also keep a track that all the compliance-related obligations are fulfilled. The Federal Tax Authority (FTA) has the authority to conduct an audit of such businesses, and in case the businesses are in violation of compliance, impose penalties on the business.

Businesses need to understand which company needs to register for this tax; otherwise, it may have to face consequences that will hamper the growth of the business. JAXA Chartered Accountants will help the management to understand the financial standing of your business and will take care of the excise registration and other related activities for the business. JAXA also provides various services such as Accounting, Audit, VAT-related services, payroll, and many more services. Or more details on the services provided by JAXA, Contact Us. We will be glad to help you.