Excise tax is a significant component of the tax system in the United Arab Emirates (UAE). Excise tax is an indirect tax levied on specific goods that are deemed harmful to individuals or the environment. In the UAE, excise tax is primarily imposed on goods such as tobacco, energy drinks, and carbonated beverages. The tax is applied at the point of import or production, and in some cases, at the point of stockpiling. The Federal Tax Authority (FTA) is the regulatory body responsible for the management and oversight of excise tax in UAE. This article provides a comprehensive guide to the registration and payment of excise tax in UAE.
Who Has to Pay Excise Tax UAE?
As per UAE excise tax law, the following persons are considered 'taxable persons' and required to register for excise tax:
- Individuals or companies importing excise goods into the UAE. Excise goods include tobacco, electronic smoking devices, carbonated drinks, energy drinks, sweetened drinks, etc.
- Producers manufacturing excise goods in the UAE.
- Persons stockpiling excise goods in the UAE where excise tax has not been paid previously. Stockpiling must be for business purposes.
- Warehouse keepers store excise goods in a designated excise warehouse or zone in the UAE.
So, in summary, any person involved in the import, production, stockpiling or warehousing of excise goods in the UAE must register for excise tax, unless specifically exempt.
How to Register for Excise Tax in UAE
The registration for excise tax in UAE is a crucial process for businesses and individuals involved in the import, production, or stockpiling of excise goods. The registration process involves creating an e-Services account with the FTA, logging in to the account, and completing the excise tax registration form.
Steps for Completing the Excise Tax Registration Form
To complete the Excise Tax registration form, follow these steps:
1. Go to the Federal Tax Authority (FTA) website and click on "e-Services" at the top of the page.
2.Log into your account or create a new one if you haven't already.
3. Once you are logged in, click on "Excise Tax" on the left-hand side of the dashboard.
4. Click on "Register for Excise Tax" and select the type of registration you need (either "Taxable Person" or "Warehouse Keeper").
5. Fill in the required information about your business, including:
- Legal name and trade name
- Business address and contact information
- Type of activity (e.g. producer, importer, retailer)
- Expected sales volume of excise goods
- Details about the excise goods you plan to sell, including the product name, brand, and HS code
- Locations where you will sell the excise goods
6. Review the information you have entered and make any necessary changes.
7. Click on "Declaration" and read the declaration carefully. If you agree to the terms, check the box to confirm.
8. Click on "Submit" to submit the Excise Tax registration form.
9. You will receive an email from the FTA confirming receipt of your application. If your application is approved, you will receive a Tax Registration Number (TRN) and a VAT certificate.
If you are registering as a taxable person, you will also need to provide details about your bank account and appoint a tax representative (if applicable). If you are registering as a warehouse keeper, you will need to provide details about the designated zone where you will store the excise goods.
Calculating Excise Tax Payable
The amount of excise tax payable is calculated as a percentage of the value of excise goods involved in taxable activities each month. The standard excise tax rate in the UAE is 100% of the price inclusive of other taxes like VAT.
For example, if the price of tobacco products including 5% VAT is AED 100, then:
Price inclusive of VAT = AED 100
VAT amount = AED 100 * 5% = AED 5
Price exclusive of VAT = AED 100 - AED 5 = AED 95
Excise tax payable = Price inclusive of VAT * Tax Rate = AED 100 * 100% = AED 100
So, for each unit of tobacco product priced at AED 100, the total excise tax payable would be AED 100. This amount must be paid by the due date every month.
Paying Excise Tax in UAE
Excise tax payments in UAE must be made every month according to the following guidelines:
- An excise tax return must be filed through the FTA portal by the end of the month for the previous month's activities.
- All excise tax due as per the return must be paid by the end of the following month.
- Payments can be made online through e-Dirham or other e-payment options listed on the FTA website.
- Late payments are subject to a penalty of 5-10% of the unpaid tax amount.
- If the tax due is not paid within 30 days of the due date, collection procedures will begin which can include account freezing.
- Outstanding tax liabilities also prevent the closure of tax registration with the FTA.
- It is important for all liable persons to pay excise tax on time each month to avoid penalties. Proper record keeping of excise goods is also required to complete returns accurately.
Table: Key Due Dates for Excise Tax Compliance in the UAE
|Excise Tax Return Submission
|By the end of each month for the previous month's activities
|Excise Tax Payment
|By the end of the month following the return month
|For a minimum period of 5 years
|Registration Application (Recommended)
|At least 30 days before the planned excise tax activity start date
Late payment of excise tax may result in penalties and fines. The penalties and fines will depend on the extent of the delay and the specific circumstances of the case. The FTA will issue a penalty notice detailing the penalties and fines to be applied.
Who Has to Pay Excise Tax in UAE?
Excise Tax is the responsibility of any person engaged in:
- The import of excise goods into the UAE
- The production of excise goods
- The stockpiling of excise goods in the UAE in certain cases, where Excise Tax has not previously been paid on the goods in the UAE and stockpiling is undertaken for business purposes
- Overseeing a designated zone i.e. a Warehouse Keeper.
How to Calculate Excise Tax in UAE?
The excise tax rate in the UAE varies depending on the type of excise good. The excise tax is calculated based on the retail selling price of the excise good, including any customs duties and other taxes. The formula to calculate the excise tax payable is:
Excise tax payable = Excise tax rate x Retail selling price of the excise good.
How to Pay Excise Tax in UAE?
Excise tax is payable to the FTA regularly, typically on a monthly or quarterly basis. The payment can be made through the e-Services portal using a credit card or bank transfer.
In conclusion, the excise tax in UAE provides a standardized process for registration and tax payment that businesses must navigate carefully to remain in good standing with tax authorities. Seeking the guidance of a qualified and experienced tax consultant can help businesses and individuals understand the registration and payment process, ensuring compliance with the relevant regulations and contributing to the responsible consumption of excise goods.