Excise Tax Registration in UAE
The United Arab Emirates (UAE) introduced the excise tax in October 2017 to diversify national revenue sources, promote healthier lifestyles, and reduce the consumption of substances deemed harmful to human health or the environment. Know more about Excise Tax Registration in UAE.
The tax applies to specific goods, such as tobacco products, energy drinks, and carbonated drinks. If your business is involved in the import, production, or stockpiling of these goods, you must register for excise tax.
This article will explore the process of excise tax registration and the benefits of engaging professional advisory services.
Understanding Excise Tax:
Excise tax is a form of indirect tax levied on specific goods known as ‘excise goods.’ When these goods are imported, produced, or stockpiled in the UAE, the excise tax is due.
The tax aims to reduce the consumption of these goods while generating additional revenue that can be used to support public services.
Excise Tax Registration in UAE:
Businesses involved with excise goods must register for the excise tax. The Federal Tax Authority (FTA) has set out a clear process for this:
Create an e-Services account: Before registering for excise tax, you need to create an e-Services account on the FTA website.
Start a new application: Once the account is set up, you can start a new excise tax registration application.
Fill in the application form: The form requires details about your business activities, financial information, and the type of excise goods you deal with.
Review and submit the application: After filling in all the required information, review your application for any errors and then submit it.
Wait for approval: The FTA will review your application and, if approved, you will receive an email with your Tax Registration Number (TRN).
The Role of Excise Tax Advisory Services:
Given the complexity of the excise tax system, many businesses opt to engage professional advisory services. These experts can guide you through the registration process and ensure you meet all your tax obligations. Here are some of the services they offer:
Excise Tax Registration: They will handle the entire registration process, ensuring all information is correctly provided to the FTA.
Tax Consultation: Advisors will help you understand the excise tax system, including which goods are subject to tax, and how much tax is due on each item.
Tax Planning: They will help devise strategies to minimize your tax liability while ensuring full compliance with the law.
Audit and Compliance: Regular audits will be conducted to ensure that your business adheres to all the excise tax laws and regulations.
Dispute Resolution: Should any issues arise with the FTA regarding your excise tax, the advisors will assist in resolving these disputes.
The introduction of the excise tax in the UAE has added another layer of complexity to doing business in the region. However, by understanding the tax, registering correctly, and potentially engaging the services of professional tax advisors, businesses can ensure they remain compliant while minimizing their tax liability.
What is Excise Tax?
Excise tax is a form of indirect tax that is levied on certain goods and services considered harmful or linked to health issues. These goods typically include alcohol, tobacco, and fuel.
The tax is usually incorporated into the price paid by the consumer and is passed on to the government by the producer or retailer.
The primary purpose of an excise tax is to discourage the consumption of the goods taxed, while also generating additional revenue for the government. It’s important to note that the specifics of excise tax can vary by country and product.
Excise tax is a type of indirect tax charged on certain goods and services, particularly those that are deemed harmful or associated with health risks. This includes items like tobacco, alcohol, and fuels.
The tax is often included in the price of the product and is paid to the government by the producer or retailer. Read more about Auditors in DAFZA | Dubai & UAE
The main goals of an excise tax are to discourage consumption of these goods and services and to generate additional revenue for the government. The specifics of what goods and services are subject to excise tax can vary from country to country.
Excise Tax Audit:
An excise tax audit is a formal review conducted by a tax authority to verify the accuracy of the excise tax a business has paid.
This process involves examining the company’s financial records, transactions, and operational practices.
Here’s a broad overview of what an excise tax audit might involve:
Notification: The business will receive a notice from the tax authority stating that they’ve been selected for an audit. This letter will usually outline the scope of the audit and the documents the business needs to provide.
Preparation: The business should gather all relevant documents, such as sales records, purchase invoices, and tax returns. It may also be beneficial to consult with a tax professional.
Review: The auditor will review the provided documents and may ask for additional information. They’ll check for any discrepancies between the reported and actual excise tax.
Findings: After the review, the auditor will provide a report detailing their findings. If there are discrepancies, the business may have to pay additional tax, penalties, or interest.
Resolution: If the business disagrees with the audit findings, they may have the right to appeal.
Remember, the best way to prepare for an excise tax audit is to maintain accurate records and comply with all relevant tax laws. If you’re uncertain about anything, it’s always a good idea to seek advice from a tax professional.
How Excise Tax Audit is performed?
Excise tax audits in Dubai and the UAE generally follow these steps:
Notification – The Federal Tax Authority (FTA) will notify the business in writing that they have been selected for an excise tax audit. The notification letter will provide details like the tax period under review.
Information Request – The FTA auditors will request information and documents related to the company’s excise tax filings and payments. This can include sales invoices, inventory records, bank statements, and accounting books.
Field Audit – The auditors may visit the company’s premises to verify physical inventories, inspect facilities, examine records, and conduct interviews with staff.
Audit Findings – After reviewing the information, the auditors will prepare a report detailing their findings. This will highlight any discrepancies or non-compliance found during the audit.
Discussions – The company will get an opportunity to discuss the audit results and provide additional information if there are areas of disagreement.
Tax Assessment – If additional tax liabilities are identified, the FTA will issue a tax assessment notice outlining the payable tax amount, penalties, and interest.
Resolution – The company can agree to the assessment and pay the dues. Or it may file an appeal if it disagrees with the audit findings. Know more about Excise Tax Registration in UAE.
The scope and duration of an excise tax audit can vary based on the company’s business activities and size of operations. Maintaining organized records can help streamline the process.
What a taxable person needs in case of an Excise Tax Audit?
In case of an excise tax audit in the UAE, a taxable person should have the following prepared and available:
Excise Tax Registration – Ensure your TRN (Tax Registration Number) is active and registration details are up-to-date.
Tax Invoices – Have all tax invoices issued for excise goods sales and purchases ready for verification.
Inventory Records – Detailed inventory accounts showing stock receipts, issues and balances for excisable goods.
Production Records – For manufacturers, maintain production reports, raw material consumption, wastage etc.
Excise Tax Returns – Copies of filed tax returns for the period under audit review.
Payments Evidence – Proof of excise tax paid to the government like bank transfer receipts.
Accounting Books – Financial accounts and bookkeeping records relating to excise tax.
Bank Statements – To corroborate transactions of purchases, sales, and tax payments.
Export Documents – For exported excise goods, have export declarations, shipping bills etc.
Other Permits/Licenses – Any licenses, approvals related to trading excisable goods.
Maintaining proper documentation helps demonstrate excise tax compliance during audits. Tax adjustments are minimised if businesses can substantiate their tax positions.