Excise Tax UAE was implemented as a tactical decision to decrease the use of harmful goods and improve public health. This tax was presented in 2017 by the Federal Tax Authority (FTA) and is set on particular goods that are considered unhealthy to human health or the atmosphere. The businesses and individuals who are engaged in the importation, production, or storage of excise goods should be aware of their responsibilities under the Excise Tax UAE law.
This blog by MY TAXMAN examines who should pay excise tax, why it was introduced and how businesses can be compliant in the constantly changing tax regime of the UAE.
Table of Contents
What is the Excise Tax UAE?
Excise Tax UAE is an indirect tax on goods that are harmful to the surroundings or human fitness. Excise tax is unlike VAT, which is imposed on a broad scope of services and goods, but it is only set on specific products, which contain:
- Carbonated beverages
- Energy beverages
- Tobacco and tobacco products
- Electronic smoking devices and gadgets
- Sweetened drinks
- E-Cigarette liquids
Excise Tax UAE has a twofold purpose: to deter people from the use of unhealthy products and to raise revenue that can be used as an investment in the health of the population.
Who Needs to Pay Excise Tax?
Some of the bodies that are under the obligation to pay Excise Tax UAE include:
Importers of Excise Goods: The companies that import excise goods into the UAE are required to enrol in excise tax and pay the required tax on their products.
Manufacturers of Excise Goods: In case you are a manufacturer of any excise goods in the UAE, you must register with ExciseTax and submit regular returns to the FTA.
Stockpilers: Companies with a stock of excise products, which they are planning to use in business, must declare and pay excise tax in Dubai or any other emirate, respectively.
Warehouse Keepers: If you have a special place to store excise goods, you must keep proper records and ensure compliance with the Excise Tax UAE rules.
Non-registration or non-adherence to excise tax rules could lead to huge fines. As such, companies need to evaluate their procedures and specify their liability beneath the Excise Tax UAE.
Why Was the Excise Tax Introduced in the UAE?
The primary reasons of the introduction of the Excise Tax in the UAE are:
Public Health: The use of products such as tobacco, energy drinks and sugary drinks should be discouraged to prevent lifestyle diseases.
Environmental Concerns: The products that have a direct or indirect effect on the environment are taxed to reduce their consumption.
Government Revenue: Excise tax is a non-oil revenue source, which helps in diversifying the economy of the UAE.
Excise Tax UAE is a preventive health policy and a financial tool as it targets harmful products.
How to Comply with Excise Tax in the UAE
To be compliant with the Excise Tax UAE, the businesses are required to:
Register with the Federal Tax Authority (FTA): All businesses that deal with excise goods should register using the online portal of the FTA.
Keep Proper Records: You should have proper records of all excise goods imported, manufactured, stored or sold.
Make Regular Returns: Registered entities must make regular returns of excise tax and pay the required amount of tax within the stipulated time.
Periodic Self-Assessment: Periodic internal audits will make sure that your business is compliant and does not get fined.
Registration, filing, and compliance are offered by professional firms such as MY TAXMAN to help you fulfil your duties under the Excise Tax UAE without any hassles.
Excise Tax in Dubai: Specific Considerations
Companies doing business in Dubai must note that the same federal laws regulate excise tax in Dubai as the rest of the UAE. Nonetheless, the compliance practices can vary slightly, based on the free zone or jurisdiction where your company is located.
Companies in Dubai that trade in excise goods should not only be registered with the FTA but also make sure that their logistics and warehousing are entirely in line with the requirements of the designated zones.
Final Thoughts
Knowing what you are required to do under the Excise Tax UAE is essential to any business that engages in the trade or production of taxable goods. As health issues and environmental awareness increase, the government will likely continue to grow and impose excise tax regulations even more.
As an importer, manufacturer, or warehouse operator, you can be confident in your compliance by hiring the help of professionals such as MY TAXMAN to ensure you avoid penalties and can concentrate on your business.
Stay informed. Stay compliant. MY TAXMAN is the company to choose when it comes to excise tax and financial compliance services in the UAE.
