The Excise tax was introduced in the UAE in 2017 to foster healthier lifestyle and to boost the government’s strategy. This tax is an indirect tax imposed on particular products which can be harmful to human health or the environment. Who has to register for Excise tax? When can anyone register/ stay compliant with UAE tax laws.
In this blog we’ll provide you with a complete guide to everything excise tax-related in the UAE: from how to register for Excise Tax, to what it encompasses, how to calculate it and how it is distinct from VAT. For businesses working in Dubai or anywhere in the emirates, this guide will show you to stay compliant with UAE tax laws.
What is Excise Tax in UAE?
Excise duty is an indirect tax levied on harmful goods, such as tobacco, carbonated drinks, and energy drinks, in the UAE since October 2017. It aims to reduce consumption and generate revenue for public services. The UAE Federal Tax Authority administers excise tax implementation and enforcement. Firms handling excisable commodities must enroll to trade legally and avoid penalties.
- Products Subject to Excise Tax Include:
- Tobacco and tobacco products
- Carbonated drinks (excluding unflavored sparkling water)
- Energy drinks
- Electronic smoking devices and tools
- Sweetened drinks
- Liquids used in electronic smoking devices and tools
When to Register for Excise Tax?
According to the Federal Tax Authority (FTA) if you are engaging in any business that involves excise goods, then you should register for excise tax.
a) Importing Excise Goods
Any business that imports excisable goods in UAE should register; volume of imports does not matter.
b) Producing Excise Goods
A company that introduced or produced in the country any excisable goods in UAE for commercial purposes shall be registered under the authority.
c) Stockpiling Excise Goods
If you hoard duty paid goods in bulk for commercial purposes, however often you trade, then you must register, e.g. a retailer that keeps a large quantity of energy drinks for a major event could come within this, if the goods aren’t subject to tax at an earlier stage.
d) Operating a Tax Warehouse
If you operate a designated excise warehouse (approved by the FTA) you will have to register as a Warehouse Keeper and/or Tax Warehouse Operator.
Excise Tax Percentage in UAE
The excise tax rate differs by product type as follows:
- 100 percent on tobacco, energy drinks, and e-smoking devices
- 50% on carbonated and sweetened drinks
These rates are then added to the retail selling price or the cost, insurance and freight (CIF), which is higher in the case of different products.
How to Calculate Excise Tax in UAE
Here’s a simple method for calculating Excise Tax in UAE:
Excise Tax = Taxable Base × Applicable Excise Tax Rate
For example:
If the CIF value of an energy drink shipment is AED 10,000:
- Excise Tax = 10,000 × 100% = AED 10,000
- Total cost after tax = AED 20,000
For carbonated drinks with a 50% tax rate:
- Excise Tax = 10,000 × 50% = AED 5,000
- Total cost after tax = AED 15,000
This tax must be declared and paid to the FTA before goods are released into the UAE market.
Required documents for Registration
For Excise Tax registration through the FTA’s e-Services portal, you require:
- Trade License copy
- Passport, Emirates ID of owner(s)/manager
- Contact details (email, mobile)
- Bank account (IBAN)
- Customs code and location if importing
- Nature of excise activities (with product list)
- Warehouse details, if applicable
For Warehouse Keeper/Tax Warehouse registration, additional documents may be required, such as
- warehouse floor plans
- lease agreements
- security plans
Steps to Register for Excise Tax:
Businesses would need to register for Excise Tax through the Federal Tax Authority (FTA) portal to stay compliant. Follow these steps:
Create an FTA Account:
- Go to https://eservices.tax.gov.ae and register your company account.
- Sign On and Begin Excise Tax Registration
- Once done, go to the Excise Tax registration form.
Provide Required Information:
You’ll need to submit:
- Trade license copy
- Copies of Passport & Emirates ID of the business owner/partners
- Description of business activities
- Excise goods you deal in
- Customs registration details (if applicable)
Submit the Application:
When you are finished, submit your application for FTA review.
Receive TRN (Tax Registration Number):
Upon approval, you’ll get a TRN and will be registered to take care of excise tax duties.
Maintain Compliance:
Once registered, businesses are required to file regular excise tax returns, which can be filed monthly or quarterly, depending on the nature of the business. Filing and paying timely will help duck fines and keep business running.
Penalties for Non-Compliance:
If you fail to register Excise Tax on time, your business might have to face serious consequences, resulting in hefty penalties such as:
- Non-registration of excise tax – AED 10,000
- After the due date of the excise tax return – AED 1000 (1st time), AED 2000 for repetition.
- Interest on excise tax will be 2% for the first month of unpaid, after 7 days it will be 4% unpaid.
- Incorrect Excise Return – It will be 3000 AED for the first time and 5000 AED for 2nd time onward.
If there is a major breach of the excise tax noticed by the FTA, then they have the right to conduct an audit, impose back-dated taxes, and suspend your business.
Stay Compliant with CBM Consultants
CBM Consultants helps businesses in excise tax registration by examining the eligibility in accordance with the activities such as Importing or producing or storing the excise goods (like tobacco, energy drink) in the UAE. We, then prepare documents if required, and get the business registered on the FTA portal and help with Designated Zone (warehouse) registration if necessary.
Beyond this registration, we also handle monthly excise tax filings, maintain proper records and product classifications, and ensure FTA compliance. CBM Consultants manage any communication with the FTA, keeping businesses prepared in order to prevent mistakes and penalties and completely conforming to UAE excise tax legislation.
Final Thoughts
How to register for excise tax in UAE Excise tax registration in UAE is imperative for businesses that handle excisable goods. Businesses can legally operate when they know the process needed to register, how they can comply, and the advantages they can get to the growth of the UAE’s economy. Although roadblocks will present themselves with regulatory complexities and administrative headaches, taking steps like hiring professional accounting services in Dubai, UAE can help you jump over those roadblocks and be successful in the road ahead. Excise tax compliant you can change into an opportunity for growth and a stamp of how credible you are in the market in the UAE.
