Excise Tax Services

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.

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.

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

Activity

Due Date

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

Record Maintenance

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.