The UAE has introduced a tax system for excise goods, which are goods that are harmful to human health or the environment, such as tobacco, energy drinks, and carbonated drinks. The tax system aims to reduce the consumption of these goods and increase government revenue. The tax system is based on the Ministerial Decision 108 of 2023, which specifies the rules and procedures for tax returns, tax periods, and tax payments for excise goods. One of the aspects of the tax system is the possibility of claiming a refund of excise tax in certain cases, such as when the excise goods are exported or used for official purposes. This article will explain the main conditions and requirements for claiming a refund of excise tax in UAE.
When Can a Refund of Excise Tax Be Claimed?
According to the ministerial decision, a refund of excise tax can be claimed in the following situations:
- Excise Goods for Official Use by Foreign Entities: - When excise goods are obtained by a foreign government, international organization, diplomatic body, or mission for official purposes, and the country of origin of these entities excludes UAE entities from any excise tax obligation or provides a refund as per international treaties or agreements related to tax liability, then they are not required to pay the tax. There may be no commercial or resale purpose of excise goods.
- Excise Goods Import and Export within the GCC: - When excise goods are imported into the UAE by a person who is registered in another GCC state that implements the excise tax system, the excise goods are then exported to another GCC state and tax is paid in that state. The person must provide evidence of being a taxable person in another GCC state, of paying tax on the excise goods in the UAE, of exporting the excise goods to another GCC state, and of paying tax on the excise goods in that state.
- Direct Export by a Non-Taxable Person: - When excise goods are directly exported by a non-taxable person who is conducting business, for which tax was previously paid by a taxable person in the UAE. The non-taxable person must substantiate paying taxes on excise goods in the UAE, exporting these goods to a location outside the UAE, and avoiding the use or alteration of excise goods during the period between supply and export, except for the necessary steps to prepare the excise goods for export.
- Indirect Export by a Non-Taxable Person: - When excise goods are indirectly exported by a non-taxable person who is conducting business, for which tax was previously paid by a taxable person in the UAE. The person exempt from taxes needs to show proof of paying taxes on the excise goods in the UAE. They also need to prove that they supplied the excise goods to a customer outside the UAE who is responsible for physically exporting the goods. During the time between supply and export, it is necessary to ensure that the excise goods are not used or changed unless it is essential for export preparation.
How To Apply for A Refund of Excise Tax?
The refund of excise tax can be applied for by submitting a refund application to the authority through the means and procedures specified by the authority. The refund application must include the following information and documents:
- The name, address, and registration number of the applicant, if applicable.
- The details of the excise goods for which the refund is claimed, such as the description, quantity, value, and amount of tax paid.
- The details of the transaction for which the refund is claimed, such as the date, invoice number, supplier name and address, and recipient name and address.
- The objective for the refund claim, such as official use, export, or other.
- The evidence of meeting the conditions and requirements for claiming the refund, such as customs declaration, commercial evidence, shipping certificate, official evidence, or other.
- The bank account details of the applicant, where the refund will be transferred.
Refund Application Review and Notification Process: -
The authority will review the refund application and the supporting documents and may request additional information or evidence if needed. The authority may also reject the refund application if it does not meet the criteria or if the documents are insufficient or invalid. Notification of the approval or rejection of the refund application, and the relevant refund amount if applicable, will be conveyed to the applicant within 60 days from the submission date by the authority. The authority will transfer the refund amount to the bank account of the applicant within 15 days from the date of notifying the applicant of the approval of the refund application.
The tax system for excise goods in UAE allows for claiming a refund of excise tax in certain cases, such as when the excise goods are exported or used for official purposes. The refund of excise tax can be applied for by submitting a refund application to the authority, along with the evidence of meeting the conditions and requirements for claiming the refund. The authority will review the refund application and notify the applicant of the outcome, and transfer the refund amount if approved. The authority and the customs department will monitor and enforce the tax system for excise goods, and impose penalties for any violations or non-compliance.
Farhat and Co, Your Trusted Corporate Tax Partner
Are you looking for a reliable and experienced partner to handle your audit and corporate tax needs in the UAE? Farhat & Co, a reputable Tax Consultant in UAE is determined to provide high-quality audit and tax services to clients across various industries and sectors for over 35 years. Whether you need a statutory audit, internal audit, tax compliance, tax advisory, or tax planning, Farhat and Co has the expertise and the resources to help you achieve your goals. Therefore, contact Farhat and Co. today and we shall be glad to assist you.