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Excise Tax Return

Ensure your excise tax returns are filed accurately and on time with our expert support. We guide you through every step—from documentation and calculation to submission—so you stay compliant and avoid penalties.

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Simplifying the Filing of Excise Tax Returns

Filing excise tax returns in the UAE can seem daunting, but with the right strategies and tools, businesses can simplify the process significantly.  Efficient organization, the effective use of technology, and consulting with experts can enhance the filing experience, reduce risks, and improve compliance. At Virtual Accountants LLC(VA), we specialize in ensuring that your excise tax return process is smooth, timely, and accurate. Partner with us to guarantee compliance and avoid costly penalties.

Breakdown of Excisable Goods Subject to UAE Excise Tax

In the UAE, excise tax applies to specific products due to their potential health or environmental effects. Below is a summary of these excisable goods and their tax rates:

1. Tobacco Products:

  • Covers items like cigarettes, cigars, and hookah tobacco.
  • Tax Rate: 100%

2. Carbonated Drinks:

  • Includes all carbonated beverages, excluding plain sparkling water.
  • Tax Rate: 50%

3. Energy Drinks:

  • Refers to drinks containing stimulants like caffeine or taurine.
  • Tax Rate: 100%

4. Sweetened Beverages:

  • Beverages with added sugar or sweeteners, including powders and concentrations used to prepare sweetened drinks.
  • Tax Rate: 50%

5. Electronic Smoking Devices and Liquids:

  • Encompasses e-cigarettes, vapes, and associated liquids
  • Tax Rate: 100%
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Importance of Excise Tax Compliance in the UAE

Excise tax compliance is essential for businesses dealing with specific goods in the UAE. Here’s why it matters:

1. Avoiding Penalties: 

Non-compliance can lead to hefty fines and late fees, impacting profitability. Maintaining compliance enables businesses to avoid incurring these costs.

2. Enhancing Reputation:

Demonstrating accountability in tax matters builds trust with regulators and customers, improving a company’s overall reputation.

3. Supporting Government Initiatives: 

Complying with excise tax regulations contributes to the UAE’s goals of promoting public health and environmental sustainability.

4. Facilitating Trade Processes: 

Adhering to these regulations streamlines customs procedures for importers and exporters, ensuring more efficient operations and minimizing delays.

5. Preparing for Audits:

 Maintaining accurate records and compliance positions businesses to navigate audits by the Federal Tax Authority (FTA) more effectively.

6. Eligibility for Refunds: 

Compliant businesses may qualify for excise tax refunds, which can improve cash flow and mitigate tax burdens.

7. Ensuring Long-Term Sustainability:

Consistent compliance fortifies a company’s market position and contributes to its long-term operational success.

How to File an Excise Tax Return in the UAE

Filling your excise tax return involves several critical steps:

  • 1. Access the FTA Portal: Log in to the Federal Tax Authority’s e-portal
  • 2. Prepare Documentation: Gather details like product type, quantity, and value
  • 3. Calculate Excise Tax: Use FTA rates to compute due taxes
  • 4. Submit Your Return: Complete and submit the online form
  • 5. Complete Payment: Conclude your return process with timely payment

Excise Tax Return Deadlines in the UAE

Timely submission of business tax returns is essential for quarterly filings:
  • Q1 (January-March): Submit by April 15
  • Q2 (April-June): Submit by July 15
  • Q3 (July-September): Submit by October 15
  • Q4 (October-December): Submit by January 15

Penalties for Late Filing

Failure to meet excise return deadlines may result in substantial penalties, which include:

  • Initial Fine: AED 1,000 for the first instance of late filing.
  • Subsequent Offenses: AED 2,000 for repeated late submissions within a two-year period.
  • Late Payment Penalty: An interest charge of 2% on the unpaid tax will be applied immediately after the due date, increasing to 4% by the 7th day and an additional 1% daily until payment is made, up to a cap of 300%.
  • Q4 (October-December): Submit by January 15

Excise Tax Return Requirements for Registered and Non-Registered Importers

There are different requirements for importers based on their registration status:

  • Registered Importers: Businesses that are registered are obligated to file their excise tax returns on a quarterly basis via the FTA portal.
  • Non-Registered Importers: Those who are non-registered must remit an excise tax at customs upon the entry of their goods into the UAE, although they are not required to submit a return.

What Happens After Importing Excisable Goods?

Once excisable goods are imported into the UAE, businesses are required to:

  • 1. Declare All Goods to the FTA: It is imperative to submit a comprehensive declaration of all excisable goods to the Federal Tax Authority (FTA) to ensure adherence to import regulations. This declaration should detail the type and quantity of the goods being imported.
  • 2. Pay Applicable Taxes at customs: Following the declaration of goods, businesses must remit any relevant taxes and duties at customs. This step is crucial for the lawful acquisition of goods and to avoid potential penalties. It is essential to be well-informed about the tax rates applicable to each category of excisable goods for proper financialpreparation.
  • 3. Maintain Records for potential audits: Accurate and organized records of all transactions and declarations are vital for future reference. Proper documentation is invaluable in the event of an audit, as it substantiates compliance with regulations and serves as proof of payment for duties and taxes.

Eligibility Criteria for Claiming an Excise Tax Refund in the UAE

Certain entities may be eligible for excise tax refunds, including:

  • Exporters of Excisable Goods: Businesses that export excisable items outside the UAE may be eligible for a refund.
  • Diplomatic and Consular Bodies: Foreign embassies or consular entities may claim refunds on specific goods, subject to applicable UAE agreements.
  • Designated Zone Entities: Businesses operating within free zones can claim refunds on goods stored in these zones, provided they are not consumed within the UAE.

Documentation Required for an Excise Tax Refund Claim

To submit a successful excise tax refund claim in the UAE, businesses need specific documents to validate eligibility and support the claim. Essential documents typically include:

  • 1. Tax Invoices: Provide clear tax invoices that display the excise tax paid, and the quantity of excisable goods involved.
  • 2. Import/Export Records: Include customs declarations for the import or export of excisable goods, along with all relevant shipping and logistics documentation.
  • 3. Payment Proof: Submit bank statements or receipts that demonstrate payments of excise tax made to the Federal Tax Authority (FTA).
  • 4. Inventory Documentation: Maintain records that confirm excisable goods were either re-exported or not consumed within the UAE, as required for refund processing.
  • 5. Sales Documentation: For goods sold within designated zones, provide sales records that detail product transfers and any applicable tax adjustments.
  • 6. Refund Application Form: Complete the FTA’s official refund application form accurately, ensuring it is accompanied by all necessary supporting details..
  • 7. Warehouse Certifications: If goods are stored in designated zones, include warehouse declarations that verify the status and compliance of the goods.

Why Partner with Us?

With our extensive expertise in UAE tax laws and a steadfast commitment to fostering your business growth, we offer reliable and efficient excise tax management services. By partnering with us, you can concentrate on your core operations, assured that your excise tax obligations are in the hands of seasoned professionals.
 
Ensure your business navigates excise tax with precision and confidence. Connect with VA today for expert assistance with UAE excise tax return services.
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FAQs

Accounting Services in the UAE
How should UAE businesses handle Excise Tax Returns when they have both imports and locally manufactured excise goods?

Businesses must declare imports via customs integration and locally manufactured goods via production records in the same return. The liability is based on the higher of the FTA-designated price or the retail price, and errors in classification can trigger FTA audits and penalties.

What happens if excise goods are released for consumption in the UAE but later re-exported?

Excise Tax is payable at the time of release for consumption. However, businesses can apply for a refund or credit adjustment once proof of export is submitted (customs documents, shipping bills, export invoices). This ensures you don’t pay tax twice.

How do businesses report excise goods that are destroyed, damaged, or expired?

If goods are destroyed under FTA-approved procedures, the business may claim a tax refund in the next return. However, unauthorized destruction (e.g., expired goods disposed of without approval) does not qualify for a refund, and tax remains payable.

Can excise businesses offset excess payments or carry forward credits to the next tax period?

Yes. If a business overpays excise tax, it can either apply for a refund or carry forward the excess as credit in subsequent returns. The FTA requires businesses to keep detailed reconciliations and supporting documents to justify adjustments.

How should businesses manage Excise Tax Returns if they operate as both a warehouse keeper and a producer?

The entity must file consolidated returns covering all excise activities — storage, release, and production. Each activity must be reported in separate declaration sections to avoid mismatches during FTA audits.

If excise goods are supplied to related parties, the taxable value must be based on the market retail price or FTA-designated price, not the internal transfer price. Underreporting values in intra-group transactions is a common compliance issue.

What are the implications of failing to submit Excise Tax Returns while remaining registered?

If a registered entity fails to submit monthly returns, the FTA may:

  • Impose administrative penalties
  • Suspend the tax registration
  • Conduct an excise audit and estimate liability based on available data
    This can also affect customs clearance privileges for importers.
How should businesses align Excise Tax Returns with their ERP/accounting systems?

ERP systems must capture:

  • Excise goods movement (imports, production, release, export, destruction)
  • Taxable value per transaction
  • Real-time reconciliation with EmaraTax returns
    Failure to integrate accounting systems with FTA requirements is a major reason for discrepancies during audits.
What advanced compliance checks does the FTA conduct during Excise Tax Return audits?

The FTA may cross-check:

  • Declared excise quantities vs customs import data
  • Sales invoices vs designated prices
  • Warehouse stock levels vs reported releases
  • Destruction approvals vs refund claims
    Discrepancies can lead to backdated liabilities, penalties, and in some cases suspension of business operations.

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Office - Dubai

Office 609, 6th Floor, Al Moosa Tower 1, Trade Centre 1, Sheikh Zayed Road, Dubai, UAE

Office - Sharjah

Sharjah Media City (Shams), Al Messaned, Al Bataeh,   Sharjah, United Arab Emirates.