Excise Tax Penalties
Excise Tax Penalties
The United Arab Emirates (UAE) implemented the excise taxation in 2017 through Federal Decree Law No. 7 on Excise Tax. Based on the legislation, excise tax in UAE applies to enterprises that store, produce, or import excise products. Excise products are those that are harmful to the environment or the well-being of humans in broad terms. It is a sort of indirect tax with varying rates for various excise products. Compliance with this legislation is a prerequisite for businesses dealing with excise goods, otherwise penalties can be imposed on them.
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Excise Tax UAE Penalties and Violations
If a taxable person under UAE excise tax fails to comply with the regulations of the excise tax legislation, he will receive an administrative penalty assessment from the Federal Tax Authority. The FTA will send the same assessment after five days if no response is received from the taxable person. The following are the violations that can attract a penalty assessment from FTA;
- The taxable person is required to display tax-inclusive prices on the excise goods. If the taxable person fails to do so, it will attract a penalty assessment.
- The taxable person is required to comply with the mechanism of processing, storing, and preserving the excise goods. The taxable person is also required to comply with the procedures and criteria set for moving excise goods from one designated zone to the other. If the taxable person fails to do these tasks as required, an administrative penalty assessment will start against him.
- The taxable person is required to provide the FTA with the list of prices of the sold, imported, and produced excise goods. Failure to do this will impose penalties on the taxable person.
- If the taxable person tries to bring or brings excise goods or tries to send excise goods outside UAE without paying the due excise taxes on those goods, it will be considered tax evasion and the taxable person will be penalized.
- If a taxable person receives, transports, stores, acquires, transfers or produces excise goods without paying its due excise tax and tries to avoid that tax, it will be considered a case of tax evasion.
- If a taxable person tries to place incorrect distinguishing marks on the excise products which clearly contradicts the provisions of the Federal Decree Law no. 7 on excise goods and tries to receive illegal payments or avoid the due excise tax, it will be considered a case of tax evasion.
- If a taxable person submits unreal, counterfeit or false records, returns, or documents, in an attempt to receive illegal refunds or avoid the due excise tax, the FTA will take notice considering it a case of tax evasion.
Penalties for Excise Goods Marking Procedures Noncompliance
The Cabinet Decision No. 33 of 2019 sets out penalties for violating different procedures involved in implementing excise goods marking. Following are some of these instances;
- If a taxable person handles or possesses specified excise goods without a mark on them, a penalty of 50,000 dirhams will be imposed.
- If a person permits the use of his premises for selling specified excise goods without a mark on them, a penalty of 25,000 dirhams will be imposed.
- If a person tries to change the marks on the excise goods or tries to overprint any mark on the excise goods, a penalty of 50,000 dirhams will be imposed.
- If a person does not report to the authority through the electronic system before moving the excise goods, a penalty of 20,000 dirhams will be imposed each time.
- If a person fails to store the marks securely, a penalty of 50,000 dirhams will be charged.
- If a person fails to attach marks on the excise goods in the specified location and manner, a penalty of 25,000 dirhams will be imposed.
- If a person executes unauthorized supplying, selling, swapping, or trading of marks, a penalty of 25,000 dirhams will be imposed.
- If a person reuses the already used marks, a penalty of 50,000 dirhams will be charged.
- If a person fails to return unused marks within due time to the authority, a penalty of 50,000 dirhams will be charged.
What is Excise Goods List UAE?
If you want to ensure excise tax compliance while operating in the UAE and avoid excise tax penalties, you must know what goods are called excise goods. Following is the list of excise goods in UAE;
- Energy drinks
- Carbonated drinks
- Tobacco
- Tobacco products
- Sweetened drinks
- Electronic smoking tools and devices
- Liquids used in electronic smoking tools and devices
Conclusively, noncompliance with the regulations of excise tax in Dubai can lead to major penalties. Therefore, it is advised that businesses that are taxable for excise tax must take assistance from excise tax consultants in UAE. Tax consultants in UAE ensure that you remain compliant with the law and save you from heavy penalties.
