Launch of new Electronic Excise Tax system and Inclusion of items in Excise Goods List
Cabinet Decision No.38 of 2017 on Excise Goods, Tax Rates Imposed Thereto, and the Method of Calculation of Excise Price (“the Excise Tax law”) was introduced in 2017 in the UAE in an attempt to reduce the consumption of harmful and unhealthy goods by the general masses. In terms of the Excise Tax law, all manufacturers, importers and stockpilers of “Excise goods” were required to register their businesses with the authority. The tax helped in generating revenue, which was used to benefit the public.
Initially, the list of Excise goods included:
- Carbonated drinks, including any aerated beverage
- Energy drinks, including any beverage which claimed to provide mental or physical stimulation
- Tobacco and tobacco products, including all items listed within Schedule 24 of the GCC Common Customs Tariff
Since the implementation of the above Excise Tax Law, the Federal Tax Authority (“the FTA”) has taken the following steps to improve the Excise Tax system:
- A new electronic system was launched, which offers precise and transparent measures for registration of Excise goods with clear guidelines and standards in addition to the new reporting requirements related to returns and declarations
- Levy of Tax on additional goods, including the following:
- An Excise Tax of 50% on ‘sweetened beverages’ including ready-to-drink as well as concentrates, powders, gels, extracts or any form that may be converted to sweetened beverages
- An Excise Tax of 100% on electronic smoking devices and equipment, as well as the liquids used in electronic smoking devices and equipment
Cabinet Decision No. 52 of 2019 on Excise Goods, Tax Percentages Imposed Thereon and the Way of Calculating the Excise Rates (“the new Excise Tax law”), which replaces the Excise Tax law included the abovementioned additions which law shall come into force from 1st December 2019.
Response from the FTA:
In a press release dated 17th August 2019, the FTA urged all relevant companies to register for the new system in agreement with the terms and conditions mentioned in the new Excise Tax law. Companies also need to ensure that they satisfy all the latest documentary requirements, which should be available at the time of registration. The new Excise Tax law provides that tax manuals and guides shall be furnished to assist in the navigation of the new reporting requirements. The new Excise Tax law shall enhance the country’s global competitiveness through continuous improvement of government services and ensuring accurate and transparent processes.
After these significant developments, it shall be the responsibility of the businesses involved in manufacturing, import or storage of Excise goods, to analyze the impact and ensure compliance with the requirements. In particular, concerning the inclusion of sugary beverages or sweeteners, business are required to provide full details of the sugar content on the label of their products.
We believe that developments regarding the new Excise Tax law will be forthcoming and shall endeavour to keep you informed.
Senat MEA is a full service platform, founded in 2014, with roots in Dubai that go back as far as 1984. Dedicated to trust and efficiency, at Senat MEA we ensure that our clients are equipped with leading counsel in navigating the region while taking into account the global nature of business and the importance of developing long lasting relationships.
Senat MEA’s team of lawyers, accountants and business consultants are highly qualified and come from a variety of backgrounds enabling us to supply you with incomparable expertise and outstanding services.