GCC Indirect Tax Weekly Digest

UAE development

Limited time remaining until the Excise Tax expansion goes live (1 December 2019)

There are less than two working weeks remaining until the impending expansion of the United Arab Emirates (UAE) Excise Tax regime on 1 December 2019, when Excise Tax will be applicable to:

• Sweetened drinks;
• Electronic smoking devices and tools; and
• Liquids used in electronic smoking devices and tools.

The Federal Tax Authority (FTA) has been in touch with many businesses by email, reminding them about the 1 December implementation date. The FTA reiterated that businesses which import, produce, or stockpile any of the above goods will face new compliance and registration obligations due to the expansion.

Affected businesses have very little time remaining to ensure that they are in a compliant position on the date of expansion. Failure to act could have a significant commercial impact, as businesses could face issues clearing shipments of stock at the border if certain compliance obligations are not fulfilled e.g. registration of new excise goods on the FTA’s portal.

Stockpilers in particular face a complex set of requirements as detailed in the recently published Excise Tax Public Clarification on stockpiling Excise goods (EXTP003; Deloitte summary here). Any business holding stock of the above listed products is required to perform a complex two-stage stock- and sales-based calculation on every individual product type within each category of Excise goods.

Further, such businesses are required to keep audited records which show the quantity of Excise goods for the 12-month period prior to 1 December 2019. The results of the required calculations and audit could result in a liability to register for Excise Tax, even where there are no other ongoing Excise obligations.

This digest is for information purposes only and should not be construed as advice. It does not necessarily cover every aspect of the topics with which it deals. You should not act upon the contents of this alert without receiving formal advice on your particular circumstances.