How to File and Pay Excise Tax in the UAE

Mostafa

Mostafa is a qualified Corporate Tax Consultant with over 5 years of experience gained in diverse intricate tax matters, he has high expertise in conducting tax negotiations and investigations with the Federal Tax Authority and other external Tax Bodies. He has vast experience in reviewing and drafting tax documents. Mostafa has also advised on a plethora of tax matters, he draws much attention to tax filing procedures and to offering professional investigations to underlining tax complexities.

How to File and Pay Excise Tax in the UAE

The UAE government introduced the excise tax in 2017 as part of its efforts to diversify its revenue sources and discourage the consumption of goods that are harmful to human health or the environment. The excise tax in UAE is an indirect tax that applies to different categories of products/goods, for instance, electronic devices for … Read more

What is Excise Tax in UAE?

The UAE implemented an excise tax on specific goods detrimental to health since October 1, 2017, targeting items like energy drinks, tobacco, and certain electronic smoking products. The goal is to promote a healthier society, reduce health-related costs, and boost government revenue. This tax affects both businesses and consumers, as businesses must comply with applicable … Read more

When is a non-resident person required to register for corporate tax in the UAE?

non-resident person registers to corporate taxThe federal decree law no. 47 of 2022, also known as the corporate tax law, was issued on Oct 10, 2022, to implement a federal-level tax on business profits in the UAE. All businesses falling within the definition of taxable persons for corporate tax purposes are obligated to fulfill their … Read more

UAE-Chile Double Tax Treaty: All you need to know

Signing a Double Tax Treaty (DTT), the UAE and Chile aim to eliminate dual taxation and enhance economic cooperation. Covering different forms of income and capital gains, the Double Tax Treaty presents reduced withholding tax rates specifically on dividends, interest, and royalties. Inclusive clauses covering the exchange of information, mutual agreement procedure, and non-discrimination are … Read more

Guide to VAT Late Payment Penalty in UAE

Value Added Tax (VAT) was implemented in the United Arab Emirates (UAE), which represented a substantial change in the country’s financial policies. The introduction of the consumption tax has resulted in some new laws and compliance requirements for businesses operating in the UAE. The VAT late payment penalty is one of the most important aspects … Read more

How to Calculate the Excise Tax deduction in UAE

How to Calculate the Deductible Tax for Excise Goods in UAE

Excise tax is levied on such goods that have been identified as having negative impacts on human health or the environment such as carbonated drinks and tobacco. The excise tax is levied on the import and production of excise goods. The excise tax is also applicable to the stockpiling of these goods in the UAE. This article explains the deductibility of excise tax in UAE, including the conditions and procedures, adhering to the specifications stipulated in Cabinet Decision No.52 of 2019 and Federal Law No.7 of 2017 that was recently amended vide Ministerial Decision No. 108 of 2023 issued in November 2023.

When Excise Tax Is Deducted by Taxable Entity?

All excise products do not fall under the purview of excise tax in UAE. There are some situations where a taxable person can deduct the tax that was previously paid on the same goods. A taxable entity refers to an individual engaged in economic activities for income generation, registered or obligated to register for excise tax in the UAE. An Eligible taxpayer can deduct the excise tax on their tax return if they meet the requirements stated in Article 16 of the Decree-Law. This deduction can be claimed for the period when the right to deduct the tax first arose. The deductible tax value mirrors the tax amount previously paid for the same goods. For example, if a taxable person imports excise goods pays the excise tax at the customs, and then exports the same goods to another country, he can deduct the tax that he paid at the customs on his tax return.

Eligibility Criteria for Deductions: -

To be eligible for a deduction, the taxpayer must provide evidence validating the previously paid tax amount on corresponding excise goods. It is the right of the Federal Tax to specify the procedure for submission of relevant supporting documents. If the tax on the excise goods was settled by another entity in the supply chain, the taxable entity must retain the following documentation as proof of the prior tax payment:

A copy of the purchase invoice for the excise goods,
Confirmation from the supplier verifying the tax payment and its amount, and
The documents provided to the FTA prove that the excise goods eligible for deduction are the exact goods that were previously taxed.

How to comply with payment rules and Stockpiling Regulations for Excise Tax in the UAE