What are the major amendments in the Excise tax Law?

Amendment to Federal Decree Law No (7) of 2017 on Excise Tax

5 years after the introduction of Excise Tax in the UAE, the Federal Decree Law No. (19) of 2022 has been issued amending the Federal Decree Law No. (7) of 2017 on Excise Tax. The amendments have also been detailed vide the Excise Tax Public Clarification EXTP009 and have come into effect from 14th October 2022.

What are the major amendments to the Excise Tax Law?

1. Exceptions from Registration – Article 6
2. Payment of Tax – Article 19
3. Statute of Limitation - Article 25(bis)

The amendments are detailed below: 

1. Exceptions from Registration 

Persons importing excisable goods for purposes other than conducting business shall be excepted from registration, without prejudice to the obligation to pay the relevant Excise Tax on that import.

This exception merely releases the person from administrative action of registration and not from the liability to pay Excise Tax or administrative penalties which may be applicable. 

2. Payment of the amount received as Excise Tax 

Any amount reflected as Excise Tax in an invoice or collected from the customer as Excise Tax needs to be settled to the Authority and shall be treated with the same treatment determined for due tax. 

EXTP009 has clarified that this applies to even cases where Excise Tax was collected in respect of goods that are not excisable.

3. Statute of Limitation

A new article has been introduced to the Law, setting forth the maximum timeframe in which the Authority can conduct a Tax Audit or issue a Tax Assessment. The general timeframe precluding FTA to take actions such as commencing audit or issuing tax assessment is 5 years from the end of the relevant tax period. However, in the following cases, FTA may conduct an audit or issue tax assessment to a taxable person after the expiration of 5 years:

A) If the tax audit was notified to the taxable person before the expiration of 5 years, provided that the Audit is completed or Assessment is issued within 4 years from the date of notification.
B) If the tax audit or assessment relates to a Voluntary Disclosure submitted in the fifth year from the end of the Tax period, provided the Audit is completed or the assessment is issued within one year from the date of submission of VD. A voluntary disclosure cannot be submitted after the expiration of 5 years from the end of the relevant tax period. 
C) In case of tax evasion, the FTA can conduct a Tax Audit or issue a tax assessment within 15 years from the end of the tax period in which the Tax evasion occurred.
D) In case of a Tax registration failure, the FTA can conduct a Tax Audit or issue a tax assessment within 15 years from the date of required registration.

With the maximum timeline to amend previous returns limited to 5 years, all businesses dealing with excisable goods are advised to review their historic filings and transactions to ensure compliance with the Law. It is also recommended to ensure accurate accounting of the excise tax charged to ascertain that the due tax is settled to the Federal Tax Authority.

Excise Tax in the UAE: Amendment to Federal Decree-Law No. 07 of 2017

Queries and Support on Excise Tax

Mr.  Hari Krishnan NPS
hari@emiratesca.com
+971 56 578 7047