Federal Tax Authority: Expansion on Excise Tax to Come into Effect on December 1, Minimum Excise Tax Price to Be Implemented

  • Excise Tax will be expanded to include sweetened drinks, electronic smoking devices, and the liquids used in these devices.
  • A comprehensive plan has been rolled out since August 2019 to promote self-compliance and facilitate early registration among business subject to Excise Tax.
  • E. Khalid Al Bustani: The FTA began accepting applications to register in the new system 4 months before the Decision came into effect.

The Federal Tax Authority (FTA) is finalising its preparations to implement Cabinet Decision No. (52) of 2019 on Excise Goods, Excise Tax Rates, and the Methods of Calculating the Excise Price, which comes into force on Sunday, December 1, 2019.

The Decision calls for expanding the scope of Excise Tax to include sweetened drinks, electronic smoking devices and tools, and the liquids used in these devices, adding these items to the list of products that have been subject to Excise Tax since it first came into effect in October 2017, which included tobacco and tobacco products, energy drinks, and carbonated beverages.

His Excellency Khalid Ali Al Bustani, Director General of the FTA, said: “Implementing the new Decision is in line with our wise leadership’s directives to further enhance the UAE’s competitiveness, build a healthy community by curbing consumption of harmful products, mitigate damages and costs incurred while combatting diseases that result from consuming these products, and supply the resources necessary to support the government’s expansion and upgrade of its services.”

Al Bustani went on to highlight the steps taken by the FTA in the past few months to facilitate self-compliance among Persons subject to Excise Tax as per the new Decision. The Authority sought to provide technical support to allow them to register early, avoid penalties, and side-step any obstacles they may encounter when importing Excise Goods. “The FTA has exerted tremendous efforts to allow Taxable Persons to register well ahead of the deadline – four months before the Decision is set to be enforced,” H.E. asserted.

Four months ago, the FTA began accepting applications to register from producers, importers, and stockpilers of sweetened drinks, electronic smoking devices and tools, and the liquids used in these devices. The Authority streamlined the procedures for registering Excise Goods via its website, calling on businesses to review the required documents and pre-requisites to register Excise Goods, and prepare all forms before submitting their applications.

Furthermore, the Federal Tax Authority partnered with Customs Departments in all seven emirates, as well as with authorised laboratories, to coordinate and monitor the circulation of goods, ensure seamless customs procedures around the new Cabinet Decision, and assess the level of compliance with said Decision in the market.

H.E. Al Bustani noted that upon issuing the Decision, the FTA put in place a comprehensive plan to ensure its swift implementation. The Authority launched a new electronic system to facilitate the registration of Excise Goods, in addition to updating the application forms for periodic Excise Tax Statements and Returns. It called on all stakeholders to abide by the new procedures to register Excise Goods in the FTA system, review the necessary documents and requirements, and prepare all forms and papers before submitting applications.

The registration requirements for Excise Goods include the product details, ingredient list, marketing campaigns including photographs and videos, a lab analysis report if needed, and price details according to the retail price guide (or price details in the relevant country for products sold outside the UAE).

“As part of its comprehensive awareness plan, the FTA issued a number of guides and a new user manual offering details on the updated forms in the system, as well as on the procedures and requirements for registering Excise Goods,” H.E. noted. “These were published in August 2019 via the e-Services portal on the FTA’s official website, which was recently upgraded as per international standards and best practices. The portal offers diverse but simple payment methods, as well as sufficient information and instructions to raise tax awareness and facilitate tax compliance among businesses.”

The guides and manuals detail the methods and standards for implementing Excise Tax on sweetened drinks, electronic smoking devices and tools, and the liquids used in these devices. They also offer a simple break-down of the steps needed to register both Taxable Persons and Excise Goods, as well as a schedule showing registration deadlines.

The FTA Director General noted that the Authority rolled out a comprehensive awareness campaign on ‘The Objectives and Mechanisms of Expanding the Scope of Excise Tax, and Registration Procedures in the FTA’s Electronic Tax System’, over the past few months. The campaign targeted all business subject to the tax in the UAE, offering a number of workshops that were held throughout September 2019 to educate both registered and unregistered Taxable Persons about the new Cabinet Decision.

The campaign showcased the constant developments made by the FTA since Excise Tax first came into effect in October 2017. It forms part of the Authority’s commitment to strengthen its partnerships with government- and private-sector entities to ensure the successful implementation of the UAE tax system.

The Federal Tax Authority noted that Cabinet Decision No. (52) of 2019 on Excise Goods, Excise Tax Rates, and the Methods of Calculating the Excise Price considers sweetened drinks to be any beverage where any type of sugar or sweeteners are added, whether it is supplied ready-to-consume as a drink, or in the form of concentrates, powders, gels, or solutions that can be converted into sweetened drinks. The new regulation defines sugar as any type of sugar determined under Standard 148 of the GCC Standardisation Organisation as ‘sugar’, while sweeteners include any type of sweeteners determined under Standard 995 of the GCC Standardisation Organisation as ‘sweeteners authorised for use in food products’.

Meanwhile, the Decision identifies electronic smoking devices as any e-cigarette devices, tools, and the like, while electronic smoking liquids include all liquids used in electronic smoking devices, whether or not they contain nicotine or tobacco. The Authority noted that as per the Decision of Minister of Finance No. (236) of 2019, Excise Tax will be collected on electronic smoking devices and liquids, according to the Customs HS codes related to e-cigarettes, e-shisha, and other related products.

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