Excise Tax in UAE

All about Excise Tax in UAE

According to Cabinet Decision No. 52 of 2019 on Excise Goods

What is excise tax?

Excise tax was introduced across the UAE in 2017. Excise tax is a form of indirect tax levied on specific goods which are typically harmful to human health or the environment. These goods are referred to as “excise goods”.

When considering whether a product is an excise good, the following definitions apply:

  • Carbonated drinks include any aerated beverage except for unflavoured aerated water. Also considered to be carbonated drinks are any concentrations, powder, gel, or extracts intended to be made into an aerated beverage.
  • Energy drinks include any beverages which are marketed, or sold as an energy drink, and containing stimulant substances that provide mental and physical stimulation, which includes without limitation: caffeine, taurine, ginseng and guarana. This also includes any substance that has an identical or similar effect as the aforementioned substances. Also considered to be energy drinks are any concentrations, powder, gel or extracts intended to be made into an energy enhancing drink.
  • Tobacco and tobacco products include all items listed within Schedule 24 of the GCC Common Customs Tariff.

 Rate of excise tax

The rates of excise tax in the UAE will be:

  • 50 per cent for carbonated drinks
  • 100 per cent for tobacco products
  • 100 per cent for energy drinks.

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VAT Refund from FTA

Federal Tax Authority Reaffirms: ‘Refunding Tax for Eligible Applicants a Direct Transaction Between Registrants and the FTA’

Federal Tax Authority Reaffirms: ‘Refunding Tax for Eligible Applicants a Direct Transaction Between Registrants and the FTA’

  • The Authority reiterated its call for maintaining strict confidentiality of registrants’ data.

Abu Dhabi, September 10, 2019 – The Federal Tax Authority (FTA) reaffirmed that refunding taxes for legally eligible applicants is a direct transaction between the registered business and the FTA, and does not call for any intermediaries.

The process is completed via advanced electronic systems, available on the FTA’s official website, which boasts impressive security features for financial transactions. It is done through official channels using the International Bank Account Number (IBAN), and via systems under the authority of – and electronically linked to – the UAE Central Bank.

In a press statement issued today, the Authority noted that all of these official systems involve dealing directly with the FTA using Tax Registration Numbers (TRNs). They stand out for their accuracy, confidentiality, and data security, in addition to being inaccessible via email or any other medium that may be prone to piracy and hacking.

The Authority issued the above statement in response to reports that certain bank customers received emails from unidentified sources impersonating banks and financial institutions, and asking recipients to provide personal data, including names, credit card numbers, and PIN codes, claiming that providing the information will allow them to recover Value Added Tax.

The FTA reiterated its warning to all registered businesses, calling on them to remain vigilant and maintain the confidentiality of their personal data. The Authority reaffirmed that all transactions – registration, submitting Tax Returns, refunding tax for eligible candidates, etc. – can be completed with a few simple steps via the e-Services portal, available 24/7 on the FTA website: www.tax.gov.ae, which was designed in accordance with international best practices to make it easier for Taxable Persons to meet their obligations.

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Federal Tax Authority Implements Penalties on Violators of the ‘Marking Tobacco and Tobacco Products Scheme

Federal Tax Authority Implements Penalties on Violators of the ‘Marking Tobacco and Tobacco Products Scheme

Information Source : https://www.tax.gov.ae/en/press-releases/Federal-Tax-Authority-Implements-Penalties


  • objective of the fines is to protect consumers against low-quality products that harm their health and the environment.


Abu Dhabi, May 25, 2019 – The Federal Tax Authority “FTA” will begin implementing the Cabinet Decision regarding violations of the “Marking Tobacco and Tobacco Products Scheme”, which calls for applying Digital Tax Stamps on the packaging of said products before supplying them to local markets.

The Authority stressed that the penalties are meant to curb attempts at commercial fraud, and protect consumers from contraband, low-quality products, that do not conform with standards and harm their health and the environment. The FTA explained that mechanisms have been set to implement the new legislation, which clearly outlines the commitments of both the taxpayers and the Authority, and sets mechanisms to tighten controls in UAE markets and ensure governance and transparency.

The Federal Tax Authority clarified that penalties have been set for nine types of violations of the Digital Tax Stamp Scheme, in an effort to protect consumers, prevent contraband, low-quality products from entering local markets, and halt sales of smuggled goods in the UAE.

According to the penalties chart enclosed in the Decision, a person who possesses or handles Designated Excise Goods that do not carry a Mark (Digital Tax Stamp) incurs a penalty of AED50,000 and 50% of the Excise Tax due on the designated Excise Goods. If a person knowingly allows his premises to be used for the sale of unmarked Designated Excise Goods in the UAE, that person shall incur a penalty of AED25,000 for the first violation and AED50,000 in case of repetition.

If a person alters or prints over Digital Tax Stamps affixed to Designated Excise Goods, they would be subject to a penalty of AED50,000 and 50% of the Excise Tax due. Meanwhile, if a person fails to report the movement of Designated Excise Goods, they will incur a penalty of AED20,000 for each time the violation was committed. In the event where a person fails to comply with the requirements to securely store the Digital Tax Stamps as determined by the Authority, a fine of AED50,000 per incident would be applicable.

In case a person fails to comply with time limits for returning unused Marks to the Authority, the penalty is AED50,000 per incident, whereas failure to affix Digital Tax Stamps to Designated Excise Goods in the manner and location specified by the Authority exposes the person in question to an administrative penalty of AED25,000 for the first violation and AED50,000 in case of repetition.

Furthermore, the penalties’ chart indicates that if a person conducts unauthorised trading, swapping, selling, or otherwise supplying of Digital Tax Stamps, they incur fines of AED25,000 for the first violation and AED50,000 in case of repetition, in addition to 50% of the amount collected as tax. If a person re-uses Marks that had previously been used on a Designated Excise Good, they would be subject to a penalty of AED50,000 and 50% of the Excise Tax due.

As of May 1, 2019, the import of any type of cigarettes into the UAE not bearing the Digital Tax Stamps has been prohibited; meanwhile, the sale across UAE markets, or importation or production of all types of cigarettes not bearing Marks will be prohibited as of August 2019. This is part of the timeline for the “Marking Tobacco and Tobacco Products Scheme”, which went into effect on January 1, 2019, and allows for electronically tracking cigarette packs from production and until they reach the end consumers, to ensure full compliance with Excise Tax obligations.

The Federal Tax Authority asserted that the Scheme will be gradually expanded to cover all tobacco products and support the Authority’s efforts to collect taxes, combat commercial fraud, and protect consumers against low-quality, contraband products that harm their health and the environment. The Scheme also facilitates inspection and control at customs ports and markets to halt sales of contraband products.

UAE Cabinet approves VAT revenues distribution between federal and local governments

UAE Cabinet approves VAT revenues distribution between federal and local governments

UAE Cabinet approves VAT revenues distribution between federal and local governments

Published Friday, May 31, 2019

The UAE Cabinet has approved distribution of the value-added tax (VAT) revenues totalled approximately AED27 billion between the federal and local government.

According to the decision 30 percent of the revenue will go to the federal government, and 70 percent to the local governments.

The decision ensures the sustainability and the quality of government services. It also contributes to the development of economic and social projects and public services.

The VAT was introduced in the UAE on 1st January 2018. The rate of VAT is 5 percent. VAT provides the UAE with a new source of income which will be continued to be utilised to provide high-quality public services.

Information Source : https://www.tax.gov.ae/en/press-releases/UAE-Cabinet-approves-VAT-revenues

All Indian expats working in UAE must register online

From January 1, those with job visas in 18 countries must sign up on emigrate portal

Dubai: The Indian government’s new online registration will be applicable to all Indians working in the UAE and 17 other notified countries from January 1, 2019, Gulf News can reveal. Those who fail to do so will not be allowed to board their flights to these countries.

On Tuesday, Gulf News reported that India made online registration mandatory for all Indians holding non-emigration clearance required (Non-ECR or ECNR) passports who have employment visas to 18 notified countries, including the UAE. Now, Indians already working in these countries also have to register when they visit their home country, a senior official confirmed.

Speaking over phone from New Delhi, M.C. Luther, joint secretary for overseas employment and protector general of emigrants, clarified that only one-time registration is required as long as an Indian remains on the same company’s employment visa. It is not necessary to register every time one goes back home unless there is a change in visa.

Registration must be completed on the eMigrate portal between 21 days and 24 hours prior to the date of travel.

Those who fail to do so will be offloaded, according to a recent advisory issued by the Ministry of External Affairs.

Emigration Clearance Required (ECR) passport holders who change their passport status to ECNR after three years of overseas employment will also have to complete the ECNR registration.

Explaining the rationale behind the move, Luther said: “It is to obtain details such as who the employer is, their contact and address details and who we can reach in case of an emergency. The idea is to be able to reach them [applicants or their emergency contact] in India and abroad if there is a need for assistance.”

Equating the ECNR registration form to the departure card issued by the Bureau of Immigration, which was discontinued in July 2017, Luther said this new move is a “completely non-intrusive form to respect the privacy of individuals and their employers”.

He stressed that the registration will not be used to tackle cases of bogus job offers or contract substitution. In such cases, workers have to use existing methods of grievance redressal. However, officials can check recruitment done through approved agents since the latter also have to provide these details on the same portal.

Luther pointed out that about 40,000 ECNR passport-holders have voluntarily registered after approved recruitment agents were intimated about the pilot phase.

Key points

All Indians holding ECNR passports with overseas employment visa should register on https://emigrate.gov.in/ext/preECNREmig.action before flying out of India.

Registration is mandatory for Indians taking up jobs in 18 notified countries: Afghanistan, Bahrain, Indonesia, Iraq, Jordan, Kuwait, Lebanon, Libya, Malaysia, Oman, Qatar, Saudi Arabia, Sudan, South Sudan, Syria, Thailand, UAE and Yemen.

Those already working on employment visas in these countries will have to register when they visit India and fly back again.

They need to re-register only if their work visa has changed.

Details to be furnished include personal, visa and travel details, emergency contact details in India and destination country and contact details of foreign employer/sponsor in the destination country.

On successful completion of registration, the applicant will receive an SMS/email.

From January 1, 2019, failure to register will result in applicant getting offloaded.

News source from : Gulf News


Tourists to receive VAT refunds from November 18

FTA said more than 4,000 retail outlets will participate

Tourists will be able to claim back Value Added Tax (VAT) on any purchases they make in the UAE from November 18, it was announced yesterday.

The Federal Tax Authority (FTA) said that the Tax Refund for Tourists Scheme would go into effect next month, allowing eligible tourists to request refunds of the five per cent VAT incurred on their purchases.

 The first phase will see the digital system of the Tax Refund for Tourists Scheme implemented at Abu Dhabi, Dubai and Sharjah International Airports, a statement from the FTA said.

As of mid-December, the system will be fully operational to include all airports and land and seaports in the UAE as stipulated in the Cabinet decision. The government says the move aims to strengthen the UAE’s position as a major global tourism destination.

The FTA explained that tax invoices issued starting from November 18, 2018, will qualify tourists who are eligible for a tax refund to reclaim taxes incurred on their purchases.

FTA Director-General Khalid Ali Al Bustani said in the statement that more than 4,000 retail outlets across the UAE will be connected electronically to the system, clarifying that only the invoices issued by retail outlets registered in the scheme and connected to the system are eligible for a refund.

These eligible outlets can be identified with posters displayed on their storefronts and visible to visitors, he said.

Source : https://gulfnews.com/business/economy/vat/tourists-to-receive-vat-refunds-from-november-18-1.2292670

VAT on entertaining staff ‘non-recoverable’: Tax authority

The Federal Tax Authority has clarified the law on gifts, parties

Entertainment services supplied to employees, such as staff parties and retirement gifts, should not be exempt from Value Added Tax (VAT), the Federal Tax Authority (FTA) has said.

The authority noted in a statement posted on its website Monday that according to the federal law on VAT, the five per cent tax incurred on goods or services purchased to be given away to staff free of charge, in order to reward them for long service, should be blocked from recovery.

 Examples of these gifts include long service awards, Eid gifts and gifts for other festivals and special occasions, or a dinner to reward service.

The clarification issued by the FTA is the latest in a number of statements regarding various technicalities surrounding the tax system.

In a recent press statement, the FTA clarified that entertainment services consist of “hospitality of any kind,” including the provision of accommodation, food and drinks which are not provided in a normal course of a meeting, access to shows or events, or trips provided for the purposes of pleasure or entertainment.

Meanwhile, the FTA added that for VAT registrants who are not designated government entities, input tax cannot be recovered if it is incurred providing entertainment services to customers, potential customers, officials, shareholders, or other owners or investors.

Khalid Ali Al BustaniFTA Director-General Khalid Ali Al Bustani said in a statement that if a designated government entity provides entertainment services to anyone not employed by the entity, it will be able to recover the input tax incurred on those costs.

This exception pertains only to entertainment services provided to non-employees, including meetings with delegations from other countries where lunch or dinner is provided, meetings with representatives from other government entities to discuss official business, where refreshments are provided, or ceremonies held to mark significant political events.

However, all companies, including designated government entities, which provide entertainment services to its employees, are prevented from recovering any VAT included on such costs.

There are a handful of circumstances in which a taxable person is entitled to recover VAT on such costs, including where it is a legal obligation to provide those services or goods to those employees.

As for employee expenses, the authority outlined certain circumstances where a taxable person will fund or reimburse an employee for certain costs that the employee incurs for business purposes, in the course of performing his/her role. These include cases where an employee is on a domestic business trip and requires overnight accommodation, the VAT incurred on hotel costs, for example, would be recoverable.

Information Source :https://gulfnews.com/business/economy/vat/vat-on-entertaining-staff-non-recoverable-tax-authority-1.2282116

Bahrain parliament approves VAT agreement

Dubai: Manama: Bahrain is set to become the third Gulf Cooperation Council (GCC) to implement the unified agreement on Value Added Tax (VAT) on goods and services.

On Sunday, the kingdom’s bicameral parliament, holding an extraordinary session upon a royal order issued last week, approved VAT at the rate of five per cent effective from January 1 next year.

The lower and upper chambers of the parliament also approved new pension rules for ministers and members of the Council of Representatives, the Shura Council and the Municipal Council.

VAT and changes to the pension system are part of efforts to fix public finances hit hard by the drop in oil prices which also pushed Bahrain’s dinar to its lowest in more than a decade.

In February, Bahraini Minister of Finance Shaikh Ahmad Bin Mohammad Al Khalifa said that Bahrain would introduce a VAT and would have everything set up by the end of 2018.