Excise Tax: Introduced in the UAE in the year 2017. It is a form of indirect tax levied on specific goods which are considered harmful to human health and the environment. It is to be noted that this tax was introduced and imposed only for the sole reason of environmental protection and to reduce the use of products and commodities that are apparently harmful to humans and the environment while also raising revenues for the government that can be spent on public services. However, with the passage of time and changing political environment, the idea of the term has changed. Currently, it is imposed on any product or commodity that is harmful to the environment.
Over the years, excise goods have been categorized into different types, and each type of excise good has its own set of rules and regulations governing the imposition of tax on the same. This tax is of two types: specific and ad valorem. The former is levied on the quantity of the product per unit, whereas the latter is levied on the value of the commodity or product. These goods are further categorized into different groups, and each group is taxed differently.
Some of the categories of excise goods include:
- Carbonated drinks.
- Energy drinks.
- Tobacco and tobacco products.
- Electronic smoking devices and tools.
- Liquids used in electronic smoking devices and tools.
- Sweetened drinks.
In accordance with the Cabinet Decision No. 52 of 2019 on Excise Goods, Excise Tax Rates, and the Methods of Calculating excise Price, the rate of ET on the aforesaid goods is as appearing below:
- Carbonated drinks- 50%.
- Energy drinks- 100%.
- Tobacco and tobacco products- 100%.
- Electronic smoking devices and tools- 100%.
- Liquids used in electronic smoking devices and tools- 100%.
- Sweetened drinks- 50%.
In accordance with the UAE Federal Decree-Law No. 7 of 2017 on Excise Tax, those entities are required to register for the tax that is involved in:
- Importing Excise goods in the UAE.
- Production of Excise goods where such goods are released for consumption in UAE.
- Stockpiling of Excise goods in UAE for certain cases.
- Anyone responsible for superintending an excise warehouse/designated zone, i.e., a warehouse keeper.
In order to register for Excise in the UAE, entities and organizations could access the website of the Federal Tax Authority (FTA). There is no threshold for registering under Excise. Any entity, business, or organization involved must register themselves on the portal of the FTA in order to avoid any penalty and associated consequences.
Enterprise House can assist you right from registration on the website of the FTA to ensuring timely compliance to the FTA ET filing and submission requirements.