Legal Update - Law No. (25) of 2018 on Excise Tax with effect on 1 January 2019.
The GCC countries have been involved in the implementation of VAT. Bahrain is the latest country where VAT was executed on 1st January 2019.
The Qatar Excise Tax Law has been executed on 1 January 2019. It is the foundation of the new Excise Tax system that Qatar is introducing based on the Common Excise Tax Framework, signed by the six Gulf Co-operation Council States. The Excise Tax Executive Regulations have also been published, which provide more details on the compliance requirements relating to Excise Tax.
Excise Tax is being directed by the newly established General Tax Authority (“GTA”) which replaces the Qatar Tax Department (“QTD”). The General Tax Authority (“GTA”) has been incorporated as a separate entity, under the supervision of the Ministry of Finance, and will be in charge of the implementation of all taxes in Qatar. Apart from managing Excise Tax, the GTA will be responsible for administering corporate income and withholding taxes in the State of Qatar.
Goods subject to Excise Tax:
The Excise Tax is applied to the import, production, stockpiling and storing of Excise goods. Excise goods include certain health damaging goods as follows:
- Tobacco and tobacco Derivatives (Tax rate 100%)
- Carbonated drinks (Tax rate 50%)
- Energy drinks (Tax rate 100%)
- Special purpose goods (Includes goods that are consumed under specific conditions and authorizations. Tax rate shall be 100%)
Hence, all entities involved in the import or the production of the above goods must register with GTA for Excise tax purposes. They are supposed to file a one-time transitional Excise tax return by 30th January 2019. Excise tax shall be calculated on the goods held by such entities on 31st December 2018.
The introduction of Excise Tax from 1 January 2019 brings a substantial change for all businesses that import, manufacture or trade in Excise goods in Qatar. Businesses should look for Excise Tax developments, including requirements provided by the Excise Tax Executive Regulations. Business should be prepared to comply with the requirements to ensure that there is minimal trouble to the organization and to avoid any penalties arising from non-compliance.
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