What is excise tax in the UAE?
Excise Tax in the UAE: In 2017, the United Arab Emirates implemented an excise tax. Excise tax is an indirect tax applied on specified commodities that are damaging to human health or the environment; “Excise goods” are what these items are called.
- Excise items are allowed to be imported into the United Arab Emirates.
- In some situations, collecting of excise items is permitted in the UAE.
- Excise products must be released from a defined zone.
On October 1st, 2017 the UAE started to impose the Excise tax in the country. Excise tax is simply an indirect tax imposed on specific goods/commodities that are usually dangerous for humans or to the environment. The tax on such items is introduced to discourage consumption of such commodities simultaneously produce the revenue to spend on public welfare.
Excise tax registration in the UAE
Who needs to register for Excise Tax in the UAE?
Any registered business that imports produce or stockpiles excise items in the UAE is required to register for Excise tax.
The following factors must be considered when determining whether a product is an excise good:
- Any carbonated beverage, with the exception of unflavored aerated water, is considered a carbonated drink. Any concentrations, powders, gels, or extracts designed to be converted into an aerated beverage are also termed carbonated beverages.
- Any beverage branded or sold as an energy drink and containing stimulant chemicals that give mental and physical stimulation is considered an energy drink. Caffeine, taurine, and ginseng are just a few examples.
- Tobacco, tobacco goods, and tobacco devices.
- Electronic smoking devices and accessories, as well as liquids utilized in such devices and sweetened beverages, will be prohibited from usage (from December 1, 2019.)
Businesses required to register for excise tax
Any firm that engages in excise is responsible for registering for excise tax.
- the importation of excise items into the UAE
- the producer of excise goods/items for consumption in the UAE
- in some situations, the hoarding of excise items in the UAE
- somebody who is in charge of an excise warehouse or a designated storage area
The excise tax in the UAE has no threshold for registration. According to VAT experts, any business plans to engage in excise activities listed above must register for excise tax in the UAE.
Why did the UAE introduced excise tax?
The UAE has imposed an excise tax in the country to discourage consumption of the above-said goods or commodities which are harmful to human health and to the environment. In addition to increasing the county’s income to spend on public welfare.
What impact will it have on consumers?
For things that are harmful to human health or to the environment, consumers may need to pay a higher price.
Excise tax registration in the UAE – How to register
A Business can register for excise tax on the Federal Tax Authority (FTA) portal’s e-services section. They should, first register and create an account. There is no registration threshold for excise tax, any corporation intending to engage in any of the activities mentioned above must register an account for excise tax.
Tax rates
according to UAE Cabinet Decision No. 52 of 2019 on Excise Goods, Excise Tax Rates, and Methods of Calculating the Excise Price, The rate of excise duty is as follows:
- Fifty percent on carbonated drinks
- Hundred percent on tobacco products
- Hundred percent on liquids used in such devices and tools
- Fifty percent on any product with added sugar or other sweeteners.
- Hundred percent on energy drinks
- Hundred percent on electronic smoking devices
Related Links
Exempt Supplies in the UAE | VAT on consultancy services | VAT on Free zone companies | VAT Registration in the UAE | VAT on Export from UAE to GCC Countries | Audit Services