How Do You Request Excise Tax Relief for Missing or Damaged Goods in a UAE Designated Zone?

What Is Excise Tax Relief for Lost or Damaged Goods in a UAE Designated Zone?

Excisable goods stored within a UAE Designated Zone are, by default, treated as released for consumption, and therefore subject to excise tax, if they go missing or are found to be deficient. The Federal Tax Authority (FTA) provides a route to relief from this default treatment through Public Clarification EXTP007, which sets out how a taxable person or warehouse keeper can request excise tax relief for genuinely lost or damaged goods, along with the process for destroying excise goods within a Designated Zone.

Where relief is not requested, or is requested and refused, the excise tax liability on the missing or deficient goods must be paid in full. Submitting a valid declaration does not guarantee relief, but it gives the FTA the basis to review the circumstances and grant a partial or full waiver where the shortage is accepted as due to a legitimate cause.

When Must a Business Notify the FTA of a Shortage or Deficiency?

The taxable person owning the goods must notify the FTA within 30 days of discovering the shortage or deficiency. This notification is made by submitting a Lost & Damaged Declaration, known as form EX203B, through the FTA’s EmaraTax portal. Missing this 30-day window does not automatically waive the right to request relief, but timely notification is treated as part of demonstrating that the loss was genuine and properly documented at the time it was discovered.

How Do You Submit an EX203B Lost & Damaged Declaration?

The EX203B declaration is submitted online through EmaraTax and is available to registered and non-registered persons for excise tax purposes, as well as warehouse keepers and businesses operating within Designated Zones. The declaration requires the registration number of the goods’ owner, the relevant Designated Zone number, and the item codes and quantities for each excisable good being declared as missing or damaged. Multiple items can be added to a single declaration, and a business can submit more than one declaration within a single tax period if needed.

Once a declaration is submitted, it cannot be edited. It first goes to the warehouse keeper for review and approval before being submitted to the FTA. If the FTA subsequently requests further information, the declaration is returned to a resubmission status, at which point the applicant can update it as required.

What Happens After You Submit the Declaration?

The FTA reviews the declaration and has the discretion to approve or reject the request for excise tax relief. Depending on the outcome, the declaration may be approved with a full or partial waiver of the excise tax liability, or approved without any waiver, in which case the calculated excise tax amount is carried forward and populated automatically in the relevant box of the business’s next excise tax return.

How Do You Check the Status of a Lost & Damaged Declaration?

The status of a submitted EX203B declaration can be checked through the EmaraTax portal under the Excise Tax section. The declaration will show one of several statuses:

• Drafted: The declaration has not yet been submitted or completed
• Pending: The declaration is with the FTA and awaiting a decision
• Rejected: The request for excise tax relief has been declined
• Resubmit: The FTA has requested additional information from the applicant
• Under Inspection: The FTA has initiated a physical inspection of the declared goods
• Approved with Waiver: The FTA has approved the declaration and waived the excise tax liability
• Approved without Waiver: The FTA has approved the declaration but has not waived the tax liability

What Recent Updates Affect Excise Relief for Lost or Damaged Goods?

FTA Public Clarification EXTP014, effective 1 July 2025 and replacing the earlier EXTP011, provides more detailed guidance specifically on natural shortages, meaning goods lost through evaporation, container residue, or similar factors inherent to storage and handling rather than accidental damage. Businesses relying on natural shortage relief should be aware that a transitional compliance window applies, allowing coverage back to 1 July 2025 provided the required laboratory report is obtained before 31 March 2026.

Separately, FTA Decision No. 11 of 2025 introduces two new deduction scenarios effective 1 January 2026, addressing natural shortages identified during mandatory inspections and cases where laboratory testing reveals an initial sugar content misclassification that led to excess tax being paid. Businesses in Designated Zones should review both developments against their own record-keeping and inspection procedures, since eligibility for these deductions depends on documentation from an independent, competent inspection body or accredited laboratory.

What Happens if a Business Does Not Submit a Declaration?

Failing to submit an EX203B declaration for lost or damaged goods does not result in an automatic waiver of the excise tax liability. Without a declaration on file, the FTA treats the goods as having been released for consumption, meaning the full excise tax liability applies regardless of the actual circumstances of the loss.

Frequently Asked Questions (FAQs)

How Farahat & Co. Can Help

Farahat & Co. assists UAE businesses with excise tax compliance, including EX203B Lost & Damaged Declaration preparation and Designated Zone excise tax relief requests.

Contact Farahat & Co. today to discuss your excise tax relief requirements.