Excise Tax Facts: Everything You Need to Know

Excise tax is a form of indirect tax imposed on the production, import, or distribution of certain goods, such as tobacco, alcohol, petroleum, and other products. In the UAE, the Federal Tax Authority (FTA) is responsible for managing the excise tax system and ensuring compliance with the relevant regulations. This article provides an overview of the key facts related to excise tax in UAE, including who has to pay excise tax, how to calculate excise tax, and how to pay excise tax.

How to Calculate Excise Tax in UAE

In the UAE, the excise tax rate varies depending on the type of excise good. To calculate the excise tax payable, you can use the following formula:

Excise tax payable = Excise tax rate x Retail selling price of the excise good

Here's a step-by-step guide on how to calculate excise tax in UAE:

1. Determine the excise tax rate for the specific excise good: The excise tax rate depends on the type of excise good. For example, tobacco products have a 100% rate, and carbonated drinks have a 50% rate.
2. Calculate the retail selling price of the excise good: Determine the retail selling price of the excise good, including any customs duties and other taxes.
3. Multiply the excise tax rate by the retail selling price: Using the formula provided above, multiply the excise tax rate by the retail selling price of the excise good to calculate the excise tax payable.

For example, let's say you want to calculate the excise tax for a tobacco product with a retail selling price of 100 AED. Using the formula:

• Excise tax payable = Excise tax rate x Retail selling price of the excise good
• Excise tax payable = 100% x 100 AED = 100 AED

In this case, the excise tax payable for the tobacco product is 100 AED.

Table: Tax Rates for Excise Goods List UAE

UAE Excise Tax Registration

Businesses involved in the import, production, or stockpiling of excise goods must register for excise tax with the Federal Tax Authority (FTA). The registration process involves providing information about the business, the excise goods being sold, and the expected sales volume. To register for Excise Tax in UAE, follow these steps:

1. Create an e-Services account with the Federal Tax Authority (FTA) if you don't have one already.
2. Log in to your e-Services account to access the Excise Tax registration form.
3. Complete the Excise Tax registration form by providing the required information about your business, the type of activity, address, and details about the excise goods you plan to sell.
4. Save your progress periodically to avoid losing any information by using the 'Save as draft' option.
5. Once you have completed and reviewed the form, submit it for approval. The status of your application will change to "Pending" while the FTA reviews it.
6. Review the progress of your Excise Tax registration application on the FTA dashboard. The status will change to "Approved" once your application is accepted

Throughout the registration process, make sure to provide accurate information and keep any required documents ready, such as your Emirates ID or passport, and bank account details for payment purposes.

Who Has to Pay Excise Tax UAE

The individuals and entities responsible for paying excise tax in UAE are those engaged in specific activities related to excise goods. The following entities are required to pay excise tax:

• Importers of Excise Goods: Any person engaged in the import of excise goods into the UAE is responsible for paying excise tax.
• Producers of Excise Goods: Individuals or businesses involved in the production of excise goods within the UAE are also required to pay excise tax.
• Stockpilers of Excise Goods: In certain cases where excise tax has not been previously paid on the goods in the UAE and stockpiling is undertaken for business purposes, the entities overseeing the stockpiling of excise goods in the UAE are liable to pay excise tax.
• Individuals Stocking Excise Goods in Designated Zones: Additionally, individuals overseeing a designated zone, such as a Warehouse Keeper, are also responsible for excise tax if the goods are stockpiled in the designated zone for business purposes and excise tax has not been previously paid on the goods in the UAE.

How to Pay Excise Tax in UAE

Excise tax in UAE can be paid through the FTA's e-Services portal. To pay an excise tax, you need to follow these steps:

1. Log in to your e-Services account on the FTA website.
2. Click on the 'Excise Tax' tab and select 'Excise Tax Payment'.
3. Enter the required information, such as the tax period, taxable person details, and the amount of excise tax payable.
4. Review the information and click on 'Submit' to complete the payment.

The excise tax must be paid to the FTA regularly, typically on a monthly or quarterly basis.

How to file Excise Tax Returns

Businesses must file excise tax returns with the FTA regularly, typically on a monthly or quarterly basis. The excise tax return must include information about the excise goods sold, the excise tax payable, and any exemptions or refunds claimed. To file Excise Tax Returns in the UAE, follow these steps:

1. Log in to your e-Services account with the Federal Tax Authority (FTA).
2. Access the Excise Tax Return form from the dashboard.
3. Fill in the required information about your business, such as the excise goods sold, the excise tax payable, and any exemptions or refunds claimed.
4. Calculate the excise tax payable on the excise goods sold based on the retail selling price of the goods and the applicable excise tax rate.
5. Submit the Excise Tax Return for approval. The status of your return will change to "Pending" while the FTA reviews it.
6. Pay the excise tax payable to the FTA regularly, typically on a monthly or quarterly basis. You can make the payment through the e-Services portal using a credit card or bank transfer.
7. Review the status of your Excise Tax Return on the FTA dashboard. The status will change to "Approved" once your return is accepted.

By following these steps, you can file your Excise Tax Returns in the UAE and ensure that you are complying with the excise tax regulations. Make sure to file your returns on time and pay the excise tax payable to avoid penalties and fines.

De-Registration from Excise Tax UAE

If a business is no longer involved in the import, production, or stockpiling of excise goods, it must de-register from excise tax with the FTA. To de-register from Excise Tax in UAE, businesses must follow these steps:

1. Create an e-Services account with the FTA if you don't have one.
2. Log in to your e-Services account.
3. Complete and submit the de-registration application form.
4. Settle any outstanding liabilities with the FTA.
5. Go to the 'My Payment' tab to pay outstanding liabilities.
6. Monitor the status of your de-registration application on the FTA dashboard.

By fulfilling these excise tax compliance obligations, businesses can avoid penalties and fines and ensure that they are operating in compliance with the excise tax regulations in the UAE.

Frequently Asked Questions

Q: What is excise tax in Dubai?

A: Excise tax is a form of indirect tax imposed on the production, import, or distribution of certain goods, such as tobacco, alcohol, petroleum, and other products.

Q: Who has to pay excise tax in Dubai?

A: Excise tax in Dubai applies to businesses involved in the import, production, or stockpiling of excise goods.

Q: How is excise tax calculated in Dubai?

A: Excise tax in Dubai is calculated based on the retail selling price of the excise good, including any customs duties and other taxes.

Q: How can I pay excise tax in Dubai?

A: Excise tax in Dubai can be paid through the FTA's e-Services portal.

Conclusion

Excise tax in UAE is an important aspect of the country’s tax system, and it is essential for businesses involved in the import, production, or stockpiling of excise goods to understand the relevant regulations and requirements. By seeking the guidance of tax consultants in the UAE, individuals, and businesses can successfully navigate the excise tax system in the UAE.

Read More: Differences between Excise Tax & VAT in UAE