The UAE cabinet has approved the list of penalties that will be imposed on businesses for violations of the Excise Tax in UAE. The fine or penalty will not be less than 500 AED and no more than triple the value of the excise tax on the transaction in question. Every taxable person is required to fully comply with excise laws and responsibilities.

Procedural penalties

Failure to maintain required records as specified by the excise tax procedures and tax authorities.
When the required person fails to submit the records as and when requested by the authority.
Failure to submit the excise registration within the required time frame as specified by the Federal Tax Authority (FTA) guideline.
Failure of the registrant to submit an excise tax return within the required time frame specified by law.
Failure to pay the excise tax stated in the tax return within the required time frame.

Penalty for incorrect submission of excise return

There are two penalties applicable for such infringement.

The first one is a fixed penalty for the first instance and for the repetition of the action.
The remaining penalty is charged if the registrant does not disclose the fact voluntarily, or makes a disclosure after being notified of the excise audit and the authority has started the tax audit process.

Penalty for Voluntary disclosures of excise duty

A voluntary disclosure should be made by a taxable person to notify the FTA of an error or omission in their excise tax return, tax assessment, or excise tax refund application. As per Federal Tax Authority (FTA) guidelines, voluntary disclosures are required to be made in any of the following cases:

where excise return filed or Tax Assessment is incorrect resulting in a calculation of the excise Tax payable being less than required i.e. an underpayment of tax due.
where a filed Tax Refund Application is incorrect, resulting in a calculation of a refund to which the Taxpayer is entitled being more than the correct amount unless an error was a consequence of an inaccurate Tax Return or Tax Assessment.

Penalties for breach of provisions of excise tax

Failure by the taxable person to display process inclusive of excise tax in UAE
Failure to comply with the conditions and procedures related to transferring the Excise Goods from a designated zone to another designated zone, and the mechanism of processing and storing such Excise Goods.
Failure by the Taxable Person to provide the Authority with price lists of the Excise Goods
produced, imported or sold thereby.

Waiving or reducing of penalties on excise tax

The federal tax authority may reduce or waive any administrative penalty imposed on any person whose violation of the provision of law or tax law was proved according to the following provision:

The person has any reasonable excuse that is acceptable to the authority.
The person provides evidence that justifies the excuse and the violation caused which led it the imposition of an administrative penalty.
The reduction or exemption applicable shall be notified to the authority as per the mechanism specified by the authority.
The person shall prove to the authorities that they have corrected the violation.
A taxable individual has the privilege to object to administrative penalties imposed on him. The taxable person may submit a requirement to the authority to reconsider any of its decision issues in connection with excise duty in whole or in part provided and also valid reasons for objecting to such penalty.

Excise tax services in the UAE

Farahat & Co is a leading tax consultant in UAE, Dubai which helps you get acquainted with the latest regulations and tax provisions in UAE. We have a team of professionals who can provide you with proper knowledge about penalties imposed on breach of excise regulations. Our team understands the excise regulations and can prevent you from facing a penalty. contact us for further consultation.