Excise Tax in the UAE: A Comprehensive Overview

Excise Tax in the UAE: A Comprehensive Overview

Introduction: Excise tax, introduced in the UAE in 2017, is an indirect tax imposed on specific goods known as "excise goods." These goods are typically harmful to human health or the environment. The primary aim of excise tax is to reduce the consumption of unhealthy products while generating revenue for the government.

Excise Goods Definitions:

1. Carbonated Drinks: Aerated beverages excluding unflavored aerated water. Also includes concentrates, powders, gels, or extracts for making aerated beverages.
2. Energy Drinks: Beverages marketed or sold as energy drinks containing stimulant substances like caffeine, taurine, ginseng, and guarana. This category also covers similar substances and related concentrates or extracts.
3. Tobacco and Tobacco Products: Items listed in Schedule 24 of the GCC Common Customs Tariff.
4. From December 1, 2019:Electronic smoking devices and tools.Liquids used in such devices and tools.Sweetened drinks.

Excise Tax Rates: The rates for excise tax are as follows:

• 50% on carbonated drinks.
• 100% on tobacco products, energy drinks, electronic smoking devices, and liquids used in such devices.
• 50% on products with added sugar or other sweeteners.

Purpose of Levying Excise Tax: The UAE Government aims to achieve two main objectives:

1. Reduce Consumption: Discourage the consumption of harmful commodities.
2. Generate Revenue: Increase government revenue for funding public services.

Impact on Consumers: Consumers will experience increased prices for goods deemed harmful to health or the environment.

Business Registration for Excise Tax: Businesses involved in importing excise goods, producing excise goods for consumption, stockpiling excise goods, or overseeing an excise warehouse must register for excise tax. There is no registration threshold, and all relevant businesses must register before engaging in excise-related activities.

Registration Process: Businesses can register for excise tax through the e-services section on the Federal Tax Authority (FTA) website. The registration deadline is essential, and FTA has the authority to conduct audits and impose penalties for non-compliance.

How to Pay Excise Tax: Once registered, businesses must file their excise tax return by the 15th day following the end of each tax period. The EmaraTax online platform facilitates registration, return filing, tax payments, and refund requests.

Conclusion: Excise tax in the UAE serves a dual purpose of discouraging the consumption of harmful goods and contributing to government revenue. It places responsibilities on businesses for registration, compliance, and timely tax payments. The comprehensive framework ensures transparency and accountability in the taxation of excise goods.