The Federal Tax Authority (the “FTA”) published a General Clarification in April 2019 in an effort to provide direction in respect of the circumstances where stockpilers may be permitted to deregister for Excise Tax purposes where less than 6 months have elapsed since the date the registration first became effective.
Cabinet Decision No. 37 of 2017 on the Executive Regulation of the Federal Decree Law No. 7 of 2017 on Excise Tax (the “Executive Regulations”) provides that one of the situations, where a request for deregistration may be rejected by the FTA, is where a period of fewer than 6 months have elapsed since the applicant was first registered.
However, an exception to the aforesaid exists for registered stockpilers where such persons have fulfilled all of their tax obligations and have ceased to engage in, or no longer intend to engage in, activities that entail the obligation to register for Excise Tax. Thus, such persons may submit a request to cancel the registration before the lapse of (6) months from the date of the actual registration and the FTA may grant such application on the proviso that the FTA is satisfied itself that any and all outstanding tax obligations have been settled.
When considering such applications, the FTA will take into account the facts before it and may request further information and/or documentation to ensure that all tax obligations have been met. Such documentation/ information may include but is not limited to:
- A copy of the applicant’s audited records reflecting the inventory of Excise Goods which were in the applicant’s possession on the date the liability to account for Excise Tax arose, as well as records indicative of the quantity of stock and sales of Excise Goods for the preceding 12 months.
- A copy of the calculations prepared in order to determine whether the person held surplus Excise Goods on the date on which the obligation to account for Excise Tax on such goods arose.
- Supporting evidence proving that Excise Tax has been paid on the surplus Excise Goods.
- Any additional information other than that mentioned in this general clarification, and it will consider every request submitted to cancel the tax registration on a case-by-case basis.
Notwithstanding the aforesaid, the following requirements must be met prior to submitting an application for deregistration:
- The applicant has fulfilled any and all tax obligations, which includes, amongst others, the submission of tax declarations and the settling of all outstanding taxes payable;
- The applicant must not engage in or have the intention to engage in any of the following activities in the future -
- Production of Excise Goods in the UAE, in the normal course of conducting business;
- Importing of Excise Goods;
- Release of Excise Goods from a Designated Zone.
It is important to bear in mind that the General Clarification merely indicates the position of the FTA and does not amend nor have the intention of amending any existing legislation.