An excise tax is a type of indirect tax levied on the sale of a specific item. If these products are imported into the UAE, manufactured in the UAE, or stockpiled in the UAE, they are taxable.
Products that are detrimental to people or the environment are subject to an excise tax. The major goal of the excise tax is to discourage consumption of those specific commodities in order to prevent harmful behaviors.
In some cases, goods will be physically tagged to demonstrate that the excise tax has been paid to the government.
Which items are Subject to Excise Duty?
All aerated beverages, with the exception of unflavored aerated water, are carbonated. Concentrates, powders, gels, and extracts utilized in the production of aerated beverages will all be considered excise goods.
Tobacco and tobacco products are illegal in the United States.
Energy Beverages: Caffeine, taurine, ginseng, and guarana are all energizers that give mental and physical stimulation in some beverages. Excise tax applies to any concentrate, powder, gel, or extract used to make an energy drink.
Excise Tax Registration - Excise Tax Registration in the United Arab Emirates
Excise tax must be paid by anybody who engages in (or wants to engage in) activities such as producing, importing, transferring, or stockpiling excise goods.
They must register within 30 days after the start of business or the law's effective date, whichever comes first. They can't do anything with excise items until they've registered for excise tax in the UAE. The excise tax has no registration threshold.
Excise Tax's Scope
If you engage in the following activities, you must register and pay excise tax:
- Excise products are imported.
- Creating or producing excise items.
- Exiting a Designated Zone with excise products
- In the ordinary course of business, stockpiling excise items.
- In the UAE, selling excise items. The seller will be responsible for the excise tax, which will be included in the total sale price of the excise product.
Excise Tax Registration exceptions
A person who does not routinely import excise items is not required to register for excise tax. They must show that they import excise items no more than once every six months or four times every twenty-four months.
Where the value of the excise goods exceeds the duty-free threshold, excise tax will still be required.
Deregistration of Excise Tax
If a person who has registered for excise tax no longer sells excise items, they can ask to be deregistered.
Before filling out the registration form, consider the following questions.
Is it necessary for me to Register for Excise Tax?
As a warehouse keeper, do I intend to supervise a Designated Zone? If that's the case, you'll need to fill out some more paperwork.
Do I have all of the necessary supporting documents and information to upload?
Is it true that I am an authorised signatory for the company being registered (a director, an owner, or someone with the authority to sign on behalf of the company)?
Documents needed to register for excise tax
Several papers will be required to confirm your details during registration. The following documents are required as backup:
Any other official records that entitle the business to administer activities inside the UAE.
- Passport copy.
- Emirates ID.
- Trade licence.
- Any other official records that entitle the business to administer activities within the UAE.
Registration Requires Information about your Company.
- The position for which you are filing an excise tax return (producer, importer, etc).
- Details about the excise goods that the company deals with.
- If appropriate, details of your Customs Authority registration.
- Provide the TRN for any other GCC state where you are registered for excise tax.
Excise Tax Rates in the United Arab Emirates
The excise tax rate in the UAE is as follows:
- 50% off carbonated beverages
- Tobacco goods are taxed at 100%.
- 100% on energising beverages
- 100% on electronic cigarette gadgets
- Liquids utilised in such equipment and tools are taxed at 100%.
- 50% off any product containing added sugar or other sweets
How much Excise Tax from The United Arab Emirates Will Be Applicable?
The following are the new UAE excise rates, which will take effect in 2020:
- In the United Arab Emirates, the proportion of excise tax is
- For carbonated beverages, a 50% discount is available.
- 100% in favour of energy drinks
- Tobacco-containing items receive a 100 percent rating.
When Will the New Excise Tax in the United Arab Emirates Be in Effect?
The Federal Tax Authority (FTA) in the United Arab Emirates has announced new excise tax rates and has also enlarged the list of excise goods. From December 1, 2019, the new excise rates will be in effect. When it goes into force, all consumers who want to buy excise goods will have to pay the excise tax on top of the VAT. Excise goods producers, importers, and stockpilers will all be required to register their products in the new system.
This rise in excise rates was implemented in the UAE to help the government's efforts to improve public health and avoid chronic diseases associated to sugar and tobacco consumption.
Excise Tax for Entrepreneurs
Businesses, producers, importers, stockpilers, and warehouse keepers will be obliged to register their UAE excise items in the new system provided by FTA when new products are levied under the new excise tax law. Businesses who have previously registered for excise tax returns in the UAE will be required to re-register their merchandise.
The FTA's new excise tax registration system will be implemented in two stages: The first phase will involve the registration of taxes on sweetened beverages, while the second phase will involve the registration of electronic smoking devices and the liquids used in them.
Conclusion
For more information on registering for excise tax in the UAE, go to the official Dhanguard website, which provides comprehensive guidance on the new excise tax law and how to register as a business.
This finishes our look at the new excise tax rates in the UAE. We hope this information was helpful in answering some of your questions.