Federal tax authority explores ways to implement new procedures to expand excise tax in collaboration with the advisory committee on excise goods

• Authority reiterated its commitment to partnering with business sectors to ensure successful implementation of tax procedures

Dubai: –  The Federal Tax Authority and the Advisory Committee on Excise Goods - a consortium of representatives from the retail sector - met at the headquarters of the Federal Tax Authority (FTA) to explore ways of expediting procedures for implementing two UAE Cabinet decisions; the first being Cabinet Decision No. (52) of 2019 on Excise Goods, Excise Tax Rates and the Method of Calculating the Excise Price and the second being Cabinet Decision No. (55) of 2019 on the Excise Price of Tobacco Products.

The two decisions effectively expanded the scope of Excise Tax to include electronic smoking devices and liquids, as well as sweetened drinks, which join the list of Excise Goods that have been subject to the tax since October 2017, namely, tobacco and tobacco products, energy drinks and carbonated beverages.

Hosted by the Advisory Committee on Excise Goods, the meeting formed part of the authority’s plan to maintain constant communication and coordination with its strategic partners, introduce them to its plans for development, listen to their opinions, and hear their suggestions for encouraging taxable persons to self-comply with the taxation requirements.

In a press statement issued today, the FTA asserted that the establishment of the Advisory Committee on Excise Goods was part of its efforts to find mechanisms and channels to maintain continuous communication between the authority and taxpayers, in order to involve them in processes, take their views on the continuous development plans implemented by the authority, and update them with the tax system.

The authority pointed out that it holds meetings periodically to contribute to the setting of the prices of goods subject to Excise Tax, to consider the classification of such goods, to develop a policy to review prices on a regular basis - as per the market requirements - and to ensure the accuracy of the price list and its updating as required. The authority asserted that the meeting was important to discuss recent developments in the retail sector with regard to Excise Goods and lauded the cooperation seen among businesses that are subject to the Excise Tax and their dedication to prompt compliance with the new regulations.

The authority called for all businesses affected by the new decisions to register their Excise Goods in the new system, reiterating that the decisions serve the UAE leadership’s directives to enhance the country’s competitiveness as they rely on international best practices and seek to build a safe and healthy community by curbing consumption of harmful products, all the while multiplying financial resources to expand the government’s offering of services.

The authority noted that following the successful implementation of Excise Tax on goods that are harmful to individuals’ health and the environment – where carbonated drinks were assigned a 50% tax and energy drinks and tobacco products incurred 100% – the FTA looks forward to more positive results from expanding the scope of Excise Tax to include additional harmful products, namely sweetened drinks, which will incur a 50% tax, and electronic smoking devices and liquids, which will see a 100% tax is being levied. The authority stated that it had intensified its preparations for this expansion in collaboration with government and private entities to ensure an effective roll-out.

The authority has developed the electronic systems necessary to facilitate and expedite procedures for implementing the new Cabinet decision and made them available to the public several weeks ago. In addition, it has prepared a complete guide that clarifies the procedures and requirements for implementing Excise Tax on sweetened drinks and electronic smoking devices and liquids. The manuals outline the process of registering both the companies and the products, as well as the time needed to do so and the penalties incurred in the event of non-compliance. To facilitate the uptake of knowledge about the requirements, the authority has begun carrying out a comprehensive awareness campaign, organising a series of workshops and seminars for those affected by the new decisions across the country.

The FTA called on all producers, importers and stockpilers of sweetened drinks to first register their business for Excise Tax on the FTA website and then register each individual Excise Good mentioned in Cabinet Decision No. (52) of 2019 on Excise Goods, Excise Tax Rates, and the Method of Calculating the Excise Price. The authority launched an upgraded electronic system in August 2019, with a new procedure for registering Excise Goods.

The authority explained that the new procedures provide an accurate and clear registration function for Excise Goods, underlining the upgrades that have been implemented on online forms for statements and Tax Returns and urging all businesses dealing with Excise Goods to follow the new procedures and prepare all necessary documents ahead of submitting their applications.

The FTA underlined the importance of all businesses subject to Excise Tax in collaborating with the authority in order to ensure compliance with the decision prohibiting the sale of cigarettes not marked by the Digital Tax Stamps in local markets, which went into effect this year, and which digitally tracks the products from the manufacturing facility until they reach the end consumer. The objective is to protect consumers from low-quality products, combat tax evasion, and ensure all Excise Taxes due on tobacco products have been paid, in keeping with Cabinet Decision No. (42) for 2018 on Marking Tobacco and Tobacco Products, and FTA Decision No. (3) of 2018 on the same subject.

The FTA has completed preparations for phase two of the ‘Marking Tobacco and Tobacco Products Scheme,’ noting that as of November 1, 2019, the Digital Tax Stamps will be made available for purchase, where producers and importers of waterpipe tobacco (‘Mu’assel’) and electrically heated cigarettes are required to place them on these products to indicate that all due taxes have been settled. As of March 1, 2020, it will be prohibited to import into the UAE any of the Excise Goods outlined in FTA Decision No. (2) of 2019 on Marking Tobacco and Tobacco Products if they do not bear the stamps. Commencing June 1, 2020, it will no longer be permissible to supply, transfer, store, or possess said Excise Goods in the UAE unless they are marked with the stamps.

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The Federal Tax Authority was established by Federal Decree-Law No. (13) of 2016 to help diversify the national economy and increase non-oil revenues in the UAE through the management and collection of federal taxes based on international best practices and standards, as well as to provide all means of support to enable taxpayers to comply with the tax laws and procedures. Since its inception in 2017, the FTA has been committed to cooperate with the competent authorities to establish a comprehensive and balanced system to make the UAE one of the first countries in the world to implement a fully electronic tax system that encourages voluntary compliance, with simple procedures based on the highest standards of transparency and accuracy – beginning from registration, to the submission of tax returns, to the payment of due taxes through the Authority’s website: www.tax.gov.ae 

© Press Release 2019