FTA: Expansion of Excise Tax Aimed

Curbing harmful consumption patterns and enhancing the standard of living are the leading objectives behind the Cabinet Decision to expand the scope of Excise Tax, asserted Khalid Ali Al Bustani, Director-General of the Federal Tax Authority, at a media workshop organised by the authority , 29th October, 2019, to introduce the purposes of the decision, as well as the procedures for registering in the FTA’s system.

Al Bustani explained that the expansion of Excise Tax answers directives from the UAE’s wise leadership to enhance the country’s competitiveness and expedite plans to build a safe, healthy community, by curbing the consumption of harmful products, diversifying sources of income, and expanding the public services offered by the government.

FTA officials attended the workshop, giving a detailed presentation about Cabinet Decision No. (52) of 2019 on Excise Goods, Excise Tax Rates, and the Methods of Calculating the Excise price.

The decision goes into effect on 1st December, 2019, expanding the list of goods subject to Excise Tax to include sweetened drinks, electronic smoking devices and tools, and the liquids used in these devices, which will be added to the items that have carried the tax since it first went into effect on 1st October, 2017, namely, tobacco and tobacco products, energy drinks, and carbonated beverages.

Al Bustani said the products that would be exempt from the new decision include ready-to-drink beverages containing at least 75 percent milk or milk substitutes; baby formula, follow-up formula, or baby food; beverages consumed for special dietary needs; and beverages consumed for medical uses.

"Surveys have shown that implementing Excise Tax at a rate of 50 percent on carbonated drinks and 100 percent on tobacco products and energy drinks has been a great success," he added.

"This success has been made evident by the high rates of compliance among businesses, facilitated by our simple and transparent approach, and our state-of-the-art electronic systems.

We have also witnessed many noticeable positive outcomes, indicating that the objectives for which Excise Tax was introduced have been largely met."

Khalid Al Bustani drew attention to the significant improvement in compliance with Excise Tax Returns requirements two years after the tax went into effect, revealing that the number of businesses registered with the FTA for Excise Tax has risen to 782.

He urged businesses that are subject to Cabinet Decision No. (52) of 2019 to register in the FTA’s electronic system well ahead of 1st December, 2019, noting that early registration helps them avoid violations and consequent obstacles they may face when importing Excise Goods.

"Since the Cabinet Decision was issued in August 2019, the FTA rolled out a comprehensive plan to implement the decision," he explained.

"In August, the authority began implementing a comprehensive awareness campaign, holding workshops for all stakeholders involved in implementing the Cabinet Decision, in collaboration with the competent authorities around the country," Al Bustani noted.

adding that the sessions targeted businesses subject to Excise Tax as per the new decision, regardless of whether or not they have registered as such with the authority.