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Weekly Spotlight: the Implementing Regulations to the UAE Excise Tax Law have been approved

This week the spotlight is on tax developments in the UAE, where the Implementing Regulations to the Excise Tax Law have been approved. The UAE’s Finance Ministry has published the Implementing Regulations to the Excise Tax Law.

Cabinet Decision No. 37/2017 identifies who is liable to pay tax as someone who conducted the activity (importing, producing or stockpiling excise goods) has not settled the tax, someone in the supply chain, an investor with a financial interest in the supply chain, or the owner of the excise goods. In certain cases, the onus may be on a warehouse keeper to pay the tax, where excise goods have been released from a designated zone and the person responsible for the tax has failed to account for it to the Federal Tax Authority. A stockpiler will not be liable for the tax where they obtain excise goods before the date the Law comes into force if they are ready for release for consumption in the State where the tax has not been paid and not waived or deferred so long as the excise goods are not excess excise goods.

It goes onto clarify the controls and conditions required for applying for tax registration, like the Authority’s right to impose a financial guarantee on someone for tax registration purposes. If a taxable person fails to notify the Authority of their obligation to register for tax, the law allows the Authority to register them with effect from the date the Decree-Law came into force (1 October 2017). A tax period for excise tax will be the calendar month, where the taxable person is expected to submit their tax return no later than the 15th day of the month following the tax period. The Decree-Law says declarations must be filed regularly and tax records be kept in line with a set of requirements, like retaining price lists of excise goods produced, imported or sold and abiding by specific timeframes, limitations and conditions.

They have also issued a Cabinet Decision on excise goods, excise tax rates and how to calculate the excise price. Cabinet Decision No. 38/2017 goes into the specifics of the tax system. It says the agreed rates are 50% for carbonated drinks and 100% for tobacco products and energy drinks. It defines excise price as the higher of the price published by the Authority for the excise good in a standard price list and the designated retail sales price for the excise good, minus the tax included. It goes onto identify the designated retail sales price as the higher of the recommended selling price of the excise good identified, declared and affixed by the importer or producer and the average retail selling price.