Federal Tax Authority UAE vide Cabinet Decision No.108/2023 introduced many amendments in Federal Law Decree 7/2017 effective from 1st December 2023. The primary objective of these revisions is to address challenges faced by businesses impacted by excise tax, enhance clarity, and specify key concepts and procedures. The modifications cover various aspects, including the definition and criteria for excise goods and the determination of the tax base, procedures for excise tax registration and deregistration, regulations governing the import, production, and release of excise goods, obligations of excise tax warehouse keepers, procedures for filing tax returns and making payments, conditions for claiming tax refunds, and the penalties and fines for non-compliance with excise tax laws and regulations.
Who Is Required to Get Registered for Excise Tax?
Excise tax registration is mandatory for businesses participating in specific activities related to excise goods. These activities comprise:
- Importing Excise Goods to the UAE involves bringing excise goods into the country.
- The production of excise goods refers to the release of such goods for consumption within the UAE.
- Hoarding Excise Goods: Preserving excise goods in the UAE under specific situations.
- Management of Warehouses or Designated Zones: In the capacity of a warehouse keeper, the responsibility entails overseeing an excise warehouse or designated zone.
- No Registration Threshold: Excise tax does not have a registration threshold. Therefore, any business involved in the mentioned activities must register before the introduction date
Excise Tax Deregistration in UAE
Tax deregistration is an important process that ensures that businesses are no longer subject to tax obligations when they are no longer applicable. Article 6 and Article 7 of the Cabinet Decision No.108/2023 have been issued by the UAE government, in line with the Federal Decree-Law No. 7 of 2017 on Excise Tax, which outlines the rules and procedures for tax deregistration. In this article, we will explain the details of these articles, covering the steps, requirements, and considerations involved in tax deregistration.
Procedure For Tax Deregistration
Article 6 of the Executive Regulation specifies the following points regarding tax deregistration:
- Application for Deregistration: Businesses must apply for tax deregistration within 30 days from the date they stop being liable for tax obligations under Article 4 of the Decree-Law.
- Cessation of Activities: If a business stops conducting activities that are subject to excise tax, as mentioned in Clause 2 of Article 2 of the Decree-Law, they are no longer liable for tax obligations six months after stopping, unless the Authority is convinced that they plan to resume these activities within the next six months.
- Effective Deregistration: The Authority will deregister the business from the date they are no longer liable for tax obligations.
- Timely Response: The Authority will respond to the business’s request for tax deregistration within 20 business days of receiving the application.
- Authority-initiated Deregistration: The Authority has the right to deregister the business without a formal request in certain cases, such as when the business is no longer liable for tax obligations or when maintaining tax registration could harm the integrity of the tax system.
- Notification Obligation: The Authority must notify the business of tax deregistration or the initial approval of the deregistration request within five business days of the event, as stated in Clause 5 of this Article.
- Compliance Controls: For tax deregistration, businesses must comply with certain controls and conditions, such as paying all tax dues, and administrative penalties, and submitting required tax returns as per the Decree Law and the Tax Procedures Law.
- Continuing Compliance: Tax deregistration does not exempt the business from complying with the Decree-Law and this Decision. It allows for the submission of a new application for tax registration when the conditions for tax registration are met.
Article 7 – Rejection of Tax Deregistration Application
Article 7 of the Executive Regulation specifies the following points regarding the rejection of tax deregistration applications:
- Rejection Criteria: The Authority can reject a tax deregistration application if the business intends to resume activities that are subject to excise tax within the next 12 months, fails to prove they are no longer liable for tax due by Article 4 and in case the duration of business is less 6th months as Article 3 of the latest law.
- Notification of Rejection: In case of rejection, the Authority will notify the business within 20 business days, following the procedures outlined in the Tax Procedures Law.
Other than Registration/deregistration the latest amendment adds important excise tax-related terms such as "official evidence," "commercial evidence," and "shipping certificate" to the Excise Tax Regulation, to align with the UAE VAT legislation. These terms are relevant for determining the place and time of supply of Excise Goods, as well as the value of the Excise Goods for Excise Tax purposes. According to the amendment, "official evidence" means any document issued by a government authority or an entity authorized by a government authority, which proves the occurrence of an event or a fact. "Commercial evidence" means any document issued by a person who is not a government authority or an entity authorized by a government authority, which proves the occurrence of an event or a fact. "Shipping certificate" means any document issued by a shipping company or an entity authorized by a shipping company, which proves the movement of goods from one place to another. The regulations stated in Article 6 and Article 7 provide a clear and comprehensive framework for tax deregistration. These guidelines, covering application procedures, compliance controls, and rejection criteria, collectively contribute to the integrity of the tax system while providing a framework for businesses to effectively navigate the complexities of tax deregistration.
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