It is been widely known that the Value Added Tax (VAT) rate will be 5%, and recently, there is another tax that has been introduced—the Excise Tax. Excise Tax applied to tobacco, energy drinks, and carbonated drinks. The rates of each are 100%, 100%, and 50%, respectively. The latter is expecting to affect consumers in a way that will encourage them in opting to lean on healthy lifestyle, citing that health problems have been noted in the country, such as cancer and obesity. One of the government’s goals is to eradicate these or at least lessen them in the country.
Other things such as concentrations, powder, gel, or extracts that produced for concocting them into energy drinks also covered in the list.
The Products are usually charge during their release for consumption. The producer, manufacturer, or importer of the aforementioned goods will pay the indirect levy at the time of release for consumption.
Excise Tax is refunded in some cases in the prevention of collecting the indirect levy twice in one supply chain (e.g., raw tobacco will have Excise Taxes and even when it’s been manufactured into cigarettes).
The Ad Valorem is the Latin phrase equivalent of “according to value”. This kind of method is basing the tax charge on the value of the goods or services. (e.g., if a soda today costs AED 1 and the tax rate 50%, then the indirect levy will AED 0.50)
This kind of method does not base on quantity but charges a specific rate on the quantity (e.g., pack, kilogram)
The Federal Tax Authority (FTA) has released some information regarding the imminent implementation of the indirect levy. It is essential to be aware of this information to help you and your business tackle the new concept of indirect levy in UAE.
The business will be subject to penal measures If non-compliance found during audits of FTA, which they have an authority to do.
You may want to know: Excise Tax Facts
Executive Regulation of Federal Decree-Law Number 7 of 2017 or Excise Tax Law will give a period for tax payment.
Before a manufacturer decides to remove its locally produced goods from its place of production, the said manufacturer is responsible for the remittance of the indirect levy to the tax authorities.
Before imported goods are removed from the customs area, it is necessary for the importer to remit the indirect levyto the tax authorities.
Excise Tax returns is file electronically on a monthly basis It’s expected. The FTA will charged the amount Within 15 days of the filing.
Read More: Tax in UAE: Online Portal for VAT & Excise Tax Registration is Open Now
Any business has the responsibility with regard to excise tax it involved in the following :
The Stockpile is define as a bulk supply that stored for future use. Hence, a stockpiler is someone whom or a business that is keeping plenty of excise goods. This is done for business purposes and it cannot be proven that they have paid the excise tax in Dubai UAE on those products. Business is not consider as stockpiler not accounted to pay for products indirect levy that possess before indirect levy implemented. However, there are more details to distinguish if a business is a stockpiler—indirect levy executive regulations.
The indirect levy is for every business that is part of planning to be part of the above listed activities. Because no minimum annual income is required for the indirect levy. Therefore, it is necessary for all businesses that fall into the categories to registering excise tax in UAE before the implementation date. you can also take help from Vat consultants in UAE Farahat and co.