Excise Tax
Globalization has enabled businesses to operate across borders, leading to increased international trade and the exchange of goods and services. These cross-border transactions often attract various forms of taxation. One such tax is Excise Tax, which is imposed on the import of specific goods that are considered harmful to human health.
To legally handle these products in the UAE, businesses must complete Excise Tax registration in accordance with local regulations. The GCC member states are implementing this tax framework with varying rates across different categories of goods, ensuring business activities align with legal and regulatory standards.
Excise Tax in the UAE primarily applies to goods such as:
Tobacco and tobacco products
Carbonated soft drinks
Energy drinks and other specified items known to have negative health impacts
Excise Tax is ultimately paid by the end consumer, although it is collected earlier in the supply chain. The key characteristics of excise tax include:
It primarily targets consumer goods
It is imposed on specific categories of products
The tax is applied either at the point of production or during importation
Businesses act as intermediaries, collecting the tax on behalf of the relevant tax authority
Registering for Excise Tax in the UAE under the Federal Tax Authority (FTA)
The Federal Tax Authority (FTA) introduced excise tax in October 2017. Businesses can register for excise tax through the e-services portal available on the FTA website. To complete the registration process and obtain a Tax Registration Number (TRN), applicants must submit specific mandatory documents as required by UAE regulations.
Excise Tax Rate in UAE
The excise tax rates in UAE are as follows:
| Product | Tax Rate |
|---|---|
| Carbonated Drinks | 50% |
| Tobacco Products | 100% |
| Energy Drinks | 100% |
Who is Required to Register for Excise Tax?
Since excise tax applies to specific goods, businesses involved with these products are required to complete the excise tax registration process. This includes manufacturers, importers, stockpilers, and warehouse keepers of excise goods.
Approaches to Imposing Excise Tax
Excise tax can be imposed using the following methods:
Specific Excise Tax
This method applies a fixed tax amount based on the quantity of goods, regardless of their price or weight.Ad-Valorem Excise Tax
In this approach, the tax is calculated as a percentage of the product’s value.
Documents Required for Excise Tax Registration in UAE
The documents required for excise tax registration are:
- Trade license
- Business activity-related information
- Declaration
- Certificate of Incorporation
- Articles of Association
- Custom number issued by the custom department
- Passport of manager, owner, and senior management
- Authorized signatory documents
- Bank account details
- Emirates ID
- Partnership agreement
How Can Earnest Consultant Help You?
Earnest is a Dubai-based company that supports businesses with accounting, taxation, and audit processes. Since our inception, we have worked with numerous clients worldwide, assisting them in successfully establishing their businesses. Our team of business experts is ready to help you obtain your excise tax certificate, enabling you to start your business involving excise goods smoothly.
To begin your business journey, feel free to contact us. We would be delighted to assist you throughout the process.
What types of business activities require excise tax registration?
Business activities subject to excise tax registration encompass the import, export, manufacturing, trading, storage, and transportation of excise goods.
How frequently must a business file excise tax returns in the UAE?
Any business registered for excise tax is required to file its excise tax return monthly, and the payment must be settled within 15 days of filing.
What is the process a business needs to follow when asked to pay excise tax?
When a business is required to pay excise tax, it must first register with the Federal Tax Authority (FTA) and submit a monthly excise tax return. The payment for the excise tax is due on the same date the return is submitted.
