Excise Duty is applicable in UAE from 1st October 2017 as notified by FTA. The papers over the past few days are advertising the opening of registration for businesses which will be covered under the Excise law. The E-services section of the FTA portal is now available.
The current coverage of Excise is only on three categories of products which are:
- Carbonated drinks at 50 %
- Energy drinks at 100 % and
- Tobacco at 100 %
Excise will be levied on the retail selling price of the goods, for e.g. if a pack of cigarette is currently sold at a selling price of AED. 10/ the Excise on that would be AED. 10/-.
Excise is not a transaction based tax like VAT so it will be levied at the point of entry into circulation in the market, which means it will be due when these goods are either imported into the country for circulation, released from a designated zone (more on this follows) or goods on which excise has not been paid are acquired by a stockpiler (more on this also follows).
The designated zone could be any place with a designated area which is considered outside the UAE for tax purposes. This does not mean Free zones, but all such places which have been registered with the FTA as designated zones. These could be warehouses or storage areas. These areas need to comply with all requirements as imposed by the FTA including the appointment of a warehouse keeper is responsible to comply with FTA requirements for the designated zone.
Stockpiler is a person or business which holds stocks for business purposes on which Excise has not been previously paid.
When is the tax payable? When imported for circulation, when released from designated zones for circulation or when acquired by a stockpiler. Registered businesses are required to submit a monthly tax return and settle the tax dues along with the return.
Excise is not transaction based tax, consequently, the scope for a refund on account of say, pending sales, bad-debts, etc do not exist. However, the scope for a refund exists if goods on which excise has been paid is used to produce another good on which excise is due, on exports where the tax has been paid on imports and in case of errors in tax submission.
The text of the Excise law and related guidelines are available on the FTA website.