Mastering Your Excise Tax Returns : All the Information You Need to Know

Excise Tax Return in UAE

If you are pondering about what is an excise tax return in UAE, then we will say you have landed on the right blog and at the right time. Flick through this blog to know the answer to this burning question. Without further ado, let’s go to the basics of the same.  An Excise tax in UAE form is a basic requirement when it comes to dealing with businesses and goods that are required to pay extra taxes. Hence, the purpose justifies the nomenclature of the form. In simple words, businesses bearing extra taxes are reckoned via this form.

Generally, the imposition of an excise tax return is done on sales of services or goods, or in case of certain uses. In order to file a tax in UAE, businesses subjected to the same can do that by filing Form 720. Keep scrolling through to know more about Tax rates in UAE.

The Method of Filing Excise Tax Return in UAE

The excise tax return in UAE is basically a record of the excise that is paid between each tax period. Businesses can file the same on an online FTA portal which are available in English and Arabic languages. Businesses must file their returns on the online FTA portal within a period of 15 days of the tax period. 

At the beginning of 2017, UAE implemented the filing of excise tax returns and this is an indirect tax that is charged to the goods or items that the government feels are harmful towards humans or the environment. Goods to which these taxes are applied are: 

  • 100% on the usage of tobacco and tobacco products, including all the items that are listed in the GCC Common Customs Tariff, Schedule 24. 
  • 50% on carbonated drinks (except for the non-flavoured ones). The taxes may also be applied to the items based on their carbonation percentages. 
  • 100% on energy drinks including caffeine, guarana, ginseng, and taurine.

Excise Tax Rates in UAE

  • Carbonated drinks – 50%
  • Energy drinks, electronic smoking devices, and tobacco products – 100%
  • Any product with added sugar or any other sweetener – 50%
  • Liquids used in electronic smoking devices and tools – 100%

Explaining the UAE Tax Return System

There is not any sort of unified system to foist federal tax legislation in the United Arab Emirates. Although all the taxation rules and regulations work under the emirates, each emirate can set their own set of tax rules. For example, DTTs are responsible for the UAE as a whole, but the actual taxes can be figured out on a local level. Since there is no unique and curated tax regime for citizens, hence it remains the same when it comes to personal or capital income tax. 

Submitting the Excise Tax Returns UAE

The submitted details in the declarations made would be extracted into the excise tax return and would be auto-populated by the ending of the return period. 

The information provided for submitting the tax return must be cross-checked and assured. The payment of the tax must be made thereafter.

On importing the excise tax return in UAE, the importer has to either pay the tax on the date or before the date of the import of the excise goods. This process takes a different turn when it comes to non-registered and registered importers. 

  • For Non-Registered Importers

A person is exempted from registering under the excise tax return in UAE, even if he is importing goods – it comes under the category of a non-registered importer. 

In order to pay the excise tax, the importer would have to log into the FTA website in order to complete the import declaration, which would include the details of the goods being imported into the UAE. 

According to the standard prices published by the FTA, the declaration would automatically calculate the liabilities caused due to the import of the goods. In case, the price of the excise goods is not available on the FTA list, the payable tax would be self-declared based on the retail sale price. 

The excise tax has to be paid by the importer before the goods pass through customs and at the time of the import, the importer’s transaction ID and import declaration would be asked for. After final confirmation and verification of all the documents, the goods would be given a green light and would be allowed to enter the UAE.

  • For Registered Importers

A taxable person who has registered as an importer and is charged under the excise tax is well-known as a registered importer. 

The registered importers would also follow the same process as the non-registered ones, except the payment of the tax liability cannot be done until the tax return is filed. 

After verifying the details from the custom department, the goods would be given a green signal and will be permitted to enter the UAE.

The information would be associated with the TRN (Tax Registration Number) and would be managed by the FTA system. Later, the excise goods would be populated automatically when the entity files the returns.  

The Excise Tax Payment Workflow

  1. The businessman is responsible for paying the tax via the online website to the FTA. 
  2. The FTA would then redirect the page to the option of “eDirham Payment Gateway.”
  3. After making the payment, the taxpayer would be receiving a notification, confirming the same. 

The Important Deadlines for the Excise Tax Submission and Payment

  • The excise tax returns must be filed/submitted within a period of 15 days following the tax period. 
  • The payment of the excise tax must be done 15 days after the end of every calendar month. 
  • In case the deadline of filing of the returns falls on any sort of national holiday, or a weekend, it would automatically be relocated to the month’s first working day, following that holiday or weekend. 

Calculating the Excise Tax

An excise tax is a tax paid on the sale of an asset which can be an automobile, any real estate property, or maybe ammunition. Each state or the federal government sets its own bar for the excise tax and before investing or purchasing a new asset. Or any capable asset including a new vehicle, therefore learning to manually determine the excise tax based on its original purchase price becomes essential. 

The calculation is pretty straightforward and there are various excise tax calculators available for assistance. 

Step 1: The excise tax is calculated on the basis of the purchase price. For example: In case the state is imposing an excise tax of 6% of the purchase price for a vehicle. Multiplying that purchase price by 6 and then subtracting the amount from the same would be your payable excise tax. 

Step 2: Calculate the excise tax based on dollar amounts. For example: In case the real estate is taxed at 1.5 dollars per 100 dollars, and the purchase price of the property is 130,000 dollars, then the calculated excise tax would be 1,950 dollars. The equation is later divided by 100, and with excise tax being 1 dollar per 500 dollars, for a vehicle at a cost of 2000 dollars, the excise tax would be around 4 dollars. 

Step 3: Excise tax can also be calculated using online calculators and many websites including state websites and the department of Motor Vehicle websites as they offer a feature of free excise tax calculators. After entering the figures, one can get an estimate of excise tax on the website.

In a Nutshell

There is ample information available on various websites regarding the excise tax return in UAE, but mentioned above were the basic do’s and don’ts for the same and the basic information anyone would need to know before going ahead with the same.

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Frequently Asked Question (FAQs)

What does an Excise Tax Return mean?

An excise tax is usually imposed on the sale of some sort of specific services or goods or on certain kinds of uses. Apart from this, the businesses subjected to excise tax must go ahead and file form 720 which is the Quarterly Federal Excise Tax Return, reporting the tax to the IRS.

What happens in case of a late return filing?

Filing of the excise tax returns must always be done on time, irrespective of the circumstances including the timely payment. Filing the returns late, or not filing them would only call for penalties from the FTA.

What does refundable tax mean?

In some cases, the FTA might refund the excise tax which had already been paid on excise goods. Due to this, the taxable person can subtract the value of the tax from the total accountable excise tax that was initially payable to the FTA on his tax return in the next month.

What are the excise tax rules?

Under rule No.8 of the Central Excise Amendment Rules, 2002, the assesses must pay the excise tax on the production or manufacture of goods. The rule also states that the excise duty must be paid on the fifth day of the subsequent month from the exact date since the goods were eliminated from the factory or the warehouse for sale purposes.

What does the excise registration certificate mean?

According to the Central Excise Act, launched in the year 1944, the central excise duty is a form of Indirect Taxation charged through the same. The duty is imposed when goods are produced or manufactured.

Rohit Kumar
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