Excise Tax
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About Excise Tax
The UAE government has announced new excise tax rates that will come into effect soon and will further increase the prices of some categories of products sold in the country. The introduction of excise tax in the UAE has left many people and businesses wondering how it will affect them. Beyond View is here to answer all your questions about declaring excise duty in the UAE.
Table of Contents
What is Excise Tax?
Excise tax is an indirect tax imposed on the sale of certain goods. These goods are subject to tax if they are imported into the Dubai, manufactured in the UAE or stored in the UAE. Excise tax is levied on products that are harmful to people or the environment.
The primary purpose of excise tax is to reduce the consumption of that particular good and thus curb unhealthy practices. In certain scenarios, goods will be physically marked to show that excise duty has already been paid to the government.
Excise tax percentage in UAE
The new UAE excise rates that will come into effect from 2020 are as follows:
- 50% for carbonated drinks
- 100% for energy drinks
- 100% for products containing tobacco
Which Excise goods will be Levied under the Excise Law of UAE?
Excise tax in the UAE will apply to all products that are considered harmful to human health or the environment. Here is a look at the list of products subject to excise tax in the UAE.
- Sweet drinks
- Energy drinks or any other concentrate, powder, gel or extracts intended to make an energy drink.
- Carbonated beverages or any other concentration, powder, gel or extracts intended to make a carbonated beverage.
- Cigarettes
- Electronic smoking devices aka e-cigarettes.
- E-liquids used in electronic smoking devices, regardless of whether they contain nicotine or tobacco.
Beverages that are excluded from Excise Tax
- Ready to drink sweetened drinks that contain at least 75% milk or its substitutes
- Baby food or baby formula
- Handling of drinks or Foods consumed for Medical Purposes
- Beverages which include alcohol
Excise Tax for Businesses
With the introduction of new products to be levied under the new Excise Law, businesses, manufacturers, importers, warehousers and ware-housekeepers will be required to register their excise goods in the UAE under the new system introduced by the FTA. Businesses already registered for excise tax in the UAE will need to re-register their items.
The new FTA excise tax registration system will be implemented in two phases: The first phase will be the tax registration of sweetened beverages and the second phase will be the registration of electronic smoking devices and liquids used in the devices.
Scope of Excise Tax
A person must register and pay excise tax if he is engaged in the following activities:
- Import of products subject to excise tax.
- Manufacture or producing of goods subject to excise goods.
- Transportation of products subject to excise tax from the designated zone
- Storage of goods subject to excise tax as part of normal business activity.
- Sale of goods subject to excise tax in the UAE. Excise tax will be paid by the seller and the tax amount will be included in the total sales price of the product subject to excise tax.
How to register for UAE Excise Tax?
Excise registration is compulsory for all businesses dealing in excise goods in the UAE. This process can easily be done through the e-Services section of the FTA website. All you need to do is login or register with your details on the FTA Excise Portal and follow the simple instructions they have there.
The FTA is currently running free workshops for businesses to train them on the new excise duty system. Businesses can register online on the FTA website for these UAE Excise Workshops.
Documents required for registration of Excise Tax
You have to provide various documents during registration to authenticate your information. Following are the documents:
- Passport copy
- Emirates ID
- Trade license
- Any other official records that entitle the business to administer activities within Dubai.
Business details required for Excise Tax Registration
- The role in which you are applying for excise tax (producer, importer, etc).
- Details of the excise services or goods with which the business is involved.
- Details of your registration with custom authority, if applicable.
- If you are registered for excise tax in another GCC State, provide the TRN for that GCC state.