The Registration for Excise Tax in the UAE has started from September 2017. All Taxable entities are entitled to register for Excise tax through the FTA’s online portal. But if a taxable entity who has registered earlier and now, is no longer dealing with excise goods can apply for Excise Tax deregistration.
An excise tax is an indirect tax which is imposed on the sale of Excise Goods. If the excise goods are imported, manufactured or stockpiled in the UAE then they are subject to Excise Tax. Excise tax is imposed on those goods which have an unhealthy impact on our life if consumed. So, the main reason to levy Excise Tax on those kinds of goods is to reduce consumption in order to live a healthy lifestyle.
Which products are subject to excise tax in the UAE?
- Carbonated drinks at 50% All kinds of aerated beverages except for unflavored aerated water are termed as carbonated drinks. Products that are used for making these aerated beverages which include concentrates, powders, gels and extracts is also considered as excise goods.
- Tobacco at 100% All kinds of Tobacco & Tobacco products are subject to Excise Tax.
- Energy Drinks at 100% Energy drinks are beverages which include energizers and supposedly provide mental and physical stimulation to an individual. Some of those stimulators are caffeine, taurine, ginseng, etc. Products that are used for making energy drink is also subject to excise tax and considered as excise goods.
What do you mean by Excise Tax Deregistration?
A registered person can apply to the tax authority to discontinue the excise tax registration if he is no longer liable for excise tax as per the provisions of the law. This process is called Deregistration.
Who Has to Apply for Excise Tax De-Registration in the UAE?
When the taxable person stops the taxable activities like import, production or stockpiling of excise goods in the UAE. The Taxable person can De-register by completing the De-Register application form through an online portal. He should specify the date from which the Taxable person is required to De-Register. A registered person shall notify the Authority as well in order to deregister within 30 days from the date he no longer has a taxable supply.
As per the provisions of the law, the authority shall respond to the deregistration application within 20 business days of the receipt of the application. In order to complete the deregistration, the applicant must settle all the tax dues as per the law along with the tax returns. The applicant is also liable to settle all the administrative penalties that are due at the time of deregistration.
What are the Conditions & Procedures for Excise Tax Deregistration?
- A Taxable person must be up to date with all tax return submissions (including Final Tax Returns) and payment of Tax and penalties. Final Tax Return should be submitted, and payable tax should be settled within 15 days from the end of the calendar month to which the final tax return belongs to.
- Confirm and submit all the four Declaration by the Authorized Signatory (through the online portal dashboard).
- Calculations of the goods that were qualified to be stockpiled on 1st of October 2017 (Excel sheet and PDF sheet signed and stamped from Tax Agent or External Auditor)
- Letter of undertaken to proof that applicant is not intended to involve in import, export, and release excise tax goods from the designated zone.
- Once the FTA confirms acceptance of your de-registration application form, you will be notified the message of “Deregistration Pre-Approval”. The status of your de-registration in the dashboard will be changed to ‘Pre-Approved
- You shall also be required to submit a final tax return which will be generated by the system in the “VAT returns” section. You will receive an email and an SMS notification informing you of the status of the application and requesting you to complete the payment of the outstanding liabilities.
- Once you complete the payment, go to the dashboard and click the De-Register button against the Excise Tax box to complete the De-Registration application.
- If at the time of De-Registration you have a credit amount pending with FTA, you will have to request for a refund first. Once the refund has been approved by FTA, FTA will process the De-Registration request.
What are the Administrative Penalties for not deregistering?
If the registered person doesn’t deregister within the prescribed time period as per the law (30 days from the date you are required to apply for deregistration), it will attract penalty from the Authority. The failure of the Registrant to submit a deregistration application within the timeframe specified in the Tax Law will attract an administrative penalty of AED 10,000 as per Table (1): Violations and Administrative Penalties related to the Implementation of the Federal Law No. (7) of 2017 on Tax Procedures.
Below mentioned is the practical example of Excise Tax Deregistration:
Company X was a producer of excise goods and registered with the FTA for Excise Tax with effect from (wef) December 1 2017. Company X was no longer liable for Excise Tax from June 3 2018. On July 12 2018, Company X applied with the FTA to deregister w.e.f June 3 2018. On July 13 2018, FTA approved Company X’s deregistration application and confirmed the effective date of deregistration as July 3 2018.
As Company X did not notify FTA of his tax deregistration within (30) thirty days from when he is no longer responsible for the excise tax, a late deregistration penalty of AED 10,000 is due. Company X is required to submit and settle the payment for a final tax return (for the period from June 1, 2018, to June 3 2018) before July 15 2018.
At Emirates Chartered Accountants Group, we offer Tax Services all over UAE in Dubai, Abu Dhabi, Sharjah, Ajman & RAK. We have also stared in our operations in Bahrain. Tax Consultants provide the clients with proper support & guidance in compliance with the provisions of the UAE Tax Laws.
Our Tax Experts have experienced in various industries and advise the businesses towards a sustainable Tax strategy in accordance with the provisions of UAE VAT law.
Our Tax Services:
For Tax Services in Dubai:
Mr Pradeep Sai
sai@emiratesca.com
+971 – 556530001
For Tax Services in Abu Dhabi:
Mr. Hari Krishnan NPS
hari@emiratesca.com
+971 56 578 7047
For Tax Services in Northern Emirate (Sharjah, Ajman, RAK, Fujairah)
Mr Praveen
praveen@emiratesca.com
+971 – 508873115
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