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Understanding UAE Excise Tax: A Guide for Businesses and Individuals

The United Arab Emirates (UAE) implemented Federal Decree-Law No. (7) of 2017 on Excise Tax in October 2017. This tax applies to specific goods, impacting businesses that produce, import, release from designated zones, or stockpile these goods. This article provides a clear explanation of excise tax in the UAE, helping both businesses and individuals navigate this regulation.

What is Excise Tax?

Excise tax is an indirect levy imposed on specific goods considered harmful or non-essential. The UAE government determines which goods are subject to excise tax, and currently, it applies to tobacco products, soft drinks, and energy drinks.

Who Needs to Register for Excise Tax?

Any business involved in the following activities related to excise goods must register with the Federal Tax Authority (FTA):

• Production of excise goods within the UAE
• Importing excise goods
• Releasing excise goods from a designated zone (bonded area)
• Stockpiling excise goods for business purposes

Exceptions to Registration

• Individuals importing excise goods for personal use, below a value specified by UAE customs legislation, are exempt from registration.
• Businesses that can demonstrate they will not regularly import excise goods may be exempt from registration by the FTA.

Tax Calculation and Payment

Excise tax is calculated based on the date of:

• Import of excise goods
• Acquisition of excise goods for stockpiling (or the effective date of the Decree-Law if acquired earlier)
• Release of excise goods for consumption (specified by the Executive Regulation)

The tax must be included in the advertised price of the goods, with some exceptions outlined in the Executive Regulation.

Penalties for Non-Compliance

The FTA can impose administrative penalties for violations such as failing to display tax-inclusive prices or not providing required records. Additionally, there are severe penalties for tax evasion, including fines and potential legal action.

Resources for Businesses

Businesses can find detailed information and register for excise tax through the Federal Tax Authority website: https://tax.gov.ae/en/. The website also provides the Executive Regulation, which offers further guidance on specific procedures and requirements.

Staying Informed

The UAE excise tax regime is relatively new, and amendments or clarifications may be issued. Businesses are advised to stay updated by monitoring the FTA website for the latest information.

Conclusion