Excise tax is a flat-rate levy on the sale of particular products, services, and operations. It is an indirect kind of tax that means it is not paid by the customer directly. Instead, the producer/company that includes it in the product price will be charged excise tax. It is your obligation to collect and pay taxes to the authorities responsible for any of the items that your firm sells.
Excise tax should be imposed as a percentage of the selling price per unit. Taxes are levied for every unit sold using the per-unit approach. Excise taxes are levied as a percentage of products or services under the percentage procedure. While this may not influence your bottom line, the demand will at least to some extent grow when the total price of the product increases.
Excise Tax in UAE
Excise tax is imposed on items that are damaging to the environment or humans. The fundamental objective of the excise tax is to decrease the use of such products so that harmful activities are restricted. These items are charged for importation into the UAE, production in the UAE, or inventory in the UAE. Goods should be physically tagged in specific circumstances to indicate that the excise tax is already paid to the govt.
Products Under Excise Tax
- Carbonated beverages: Aerated beverages excluding aerated water. Excise products are also regarded as products that are used to produce aerated drinks, which include concentrates, powders, gels, and extracts.
- Product is related to smoking and tobacco.
- Energy Drinks: Some drinks include energizers, such as caffeine, taurine, ginseng, and guarana which give mental and physical stimulation. Any concentration, powder, gel, or extract produced in an energy beverage is subject to excise duty.
If a person is involved in the following activities, he or she must register and pay excise tax:
- Import of items for excise purposes.
- Contract products production or manufacture.
- Transfer from a designated zone of excise products
- In the usual course of business, stockpiling excise products.
- Excise products are sold in the UAE. The seller will pay the excise tax and the total selling price of the excise product includes the tax.
Excise Tax on Tobacco
The government of the UAE has imposed a 100% excise tax on tobacco products. The reason for doing so is to reduce the consumption of harmful tobacco products. The largest avoidable cause of mortality is tobacco smoking, accounting for almost 1 in every 5 fatalities each year. On average smokers die approximately ten years sooner than non-smokers. Smoking may cause cancer most people know. However, it can also lead to several other ailments and lead to damages of other body organs too.
Excise Tax on Electronic Smoking Devices
The Government of the United Arab Emirates seeks to safeguard its inhabitants from danger. Electronic smoking devices and liquid devices used in such devices and an excise tax of fifty percent on sweetened foods have been imposed in UAE since 1 December 2019. Since 2017, excise taxes have been imposed on other hazardous goods. 100% excise tax is imposed on electronic smoking devices in UAE.
Electronic cigarettes are a variety of items producing heated aerosols that users generally inhale via a mouthpiece and that contain nicotine. E-cigarettes are variously designed, looked at, and complicated, but usually include comparable components and work similarly. Each component of the device, like battery, cartridge and mouthpiece, has different implications and have different effects on health of different users. They may also interact to impact the total of their distinct parts and pose a research challenge in this area. The fundamental function of e-cigarettes usually follows a number of phases and involves e-cigarette design, heating element activation that aerosolizes the liquid container, and liquid aerosol inhalation.
We at AM Audit provide our customers with the necessary information, guidance, and services related to excise tax. Following are the services that are provided:
- Stockpile Audit
- Excise tax Registration
- Excise Return Filing
- Excise Declaration
- Excise Tax De-registration
Interested clients can contact us on our website and get a consultation regarding their business needs.
Why Would You Need Help?
The excise tax regulation has entered into force on 1 October 2017 in accordance with Federal Decree-Law No. (7) of 2017. The Authorities had declared that the Excise tax will be in full force by 1 October 2017 as we move ahead in October. Since the Nation has adopted the Excise Tax, firms and businesses can take care of their inventories of the items covered by the Excise Tax Act more transparently. The most convenient way for firms to monitor and test the quality of the items flowing into and out during business transactions will be to hire an inventory auditor to maintain a good record of the Excise goods’ movements. AM Audit consultants and auditors are top UAE auditors doing internal and regulatory audits and providing inventory audit facilities for their clients. Moreover, we provide services like helping you register, de-register, file, and declare your excise tax.
Excise tax is levied on products that are usually harmful to human health. The government of UAE has imposed these taxes on tobacco and electronic smoking devices (100% tax) to reduce the use and consumption of these products. It is compulsory for anyone selling or importing these products to comply with these rules and pay the excise tax to the government.