The Federal Tax Authority (FTA) has announced new rates for Excise Tax in the UAE and has brought in more products to the purview of Excise Tax such as Sweetened drinks ( Includes Concentrates ,powders, gel, extracts or any form that can be converted in to a sweetened drink), Electronic smoking devices and tools and Liquids used in electronic smoking devices.  The applicability of Excise Tax for these products will come into effect from 1 December 2019.  Producers, importers and stockpiler of excise goods will also be required to register these goods in the new system.

The addition of the product under Excise Tax in the UAE was initiated to support the government’s efforts to enhance public health and prevent chronic diseases directly linked to the consumption of sugar and tobacco.

Who is a Stockpiler?

Any person who holds stocks of sweetened drinks (Includes Concentrates, powders, gel, extracts or any form that can be converted in to a sweetened drink), electronic smoking devices, liquids and tools for business purposes which are “excess in quantity” and excise tax was not accounted for, the same shall be regarded as a stockpiler and required to register for excise tax. “Excess in quantity” stands for the excisable goods in excess of the person’s average monthly stock level or twice the average monthly selling stock, based on a 12-month average. The check must be done on a product to product basis and if any product falls under “excess in quantity”, the person shall apply for excise registration as a stockpiler and account for tax.

For example, if you are a supermarket and having product lines such as Bottled Mango Juice, Lemon, Kiwi, Mix fruit etc, Stockpiler status should be checked for each of these products. If Mango Juice alone qualifies to be a Stockpiler, the supermarket shall apply excise registration, disclose the excess quantity and account for tax thereon.

 Steps to identify the Stockpiler:

Step 1: Identify the excisable products of the company

Step 2: Compute the 2 month’s average sales quantity (based on previous 12 months sales quantity).
Step 3: Compute the one month average stock (based on   for previous 12 months average stock

((Opening stock Qty + Closing Stock Qty)/2))

Step 4: Assess the Inventory of excisable product as on date of the law came into effect

Step 5: Normal Stockpile of Excise Goods = Lower of Step 2, Step 3 or Step 4

Step 6: Excess Excise Stockpile = Actual Stock as on date of the law came into effect – Normal Stockpile

Step 7: Arrive on the RSP/ DRSP of the product

Step 8: Assess the Rate of Tax (50% or 100)

Step 9: Compute the excise tax due by Step 6 x Step 7 x Step 8

Decision 52 expands the list of goods subject to excise tax by replacing the currently effective Cabinet Decision No. 38 of 2017 as follows:

If you want to do a Stockpiler Status Computation?

How can Emirates Chartered Accountants Group support you for Excise Tax in the UAE?

 Emirates Chartered Accountants Group(www.emiratesca.com) is a registered Tax Agent in the UAE with the Federal Tax Authority under ECA Taxation Procedure. They house TAX Experts providing VAT Consultancy, VAT Advisory and Return Filing Services in the UAE.

We do support and guide the business community to register for Excise Tax in the UAE as well as advisory service with the compliance of the UAE Excise Law.

For more information on Excise Tax Registration in the UAE and related services, kindly contact our below representative.