How to register for excise tax in UAE

What is excise Tax?

How to register for excise tax in UAE?

Excise tax refers to an indirect type of taxation imposed on the manufacture, sale or use of certain types of goods and products. These specific goods are typically harmful to human health or the environment. These goods are referred to as “excise goods”. Excise tax was introduced across UAE in 2017.

WHY IT MATTERS:

The implementation of excise taxes allow Federal and state governments the means to raise additional revenue necessary for large projects such as social programs.

Excise taxes are most often levied upon tobacco and tobacco products, aerated drinks etc. These are often considered superfluous or unnecessary goods and services. To raise taxes on them is to raise their price and to reduce the amount they are used. In this context, excise taxes are sometimes known as “sin taxes.” 

The UAE Government is levying excise tax to reduce consumption of unhealthy and harmful commodities while also raising revenues for the government that can be spent on beneficial public services.

Role of Consumer

Consumers will need to pay more for goods that are harmful to human health or the environment.

 Which are the goods subject to the Excise Tax in the UAE?- How to register for excise tax in UAE?

When considering whether a product is an excise good, the following definitions apply:

• Carbonated drinks include any aerated beverage except for unflavoured aerated water. Also considered to be carbonated drinks are any concentrations, powder, gel, or extracts intended to be made into an aerated beverage.

• Energy drinks include any beverages which are marketed, or sold as an energy drink, and containing stimulant substances that provide mental and physical stimulation, which includes without limitation: caffeine, taurine, ginseng and guarana. This also includes any substance that has an identical or similar effect as the aforementioned substances. Also considered to be energy drinks are any concentrations, powder, gel or extracts intended to be made into an energy enhancing drink.

• Tobacco and tobacco products include all items listed within Schedule 24 of the GCC Common Customs Tariff. 

Rate of excise tax

The rates of excise tax in the UAE will be:

• 50 per cent for carbonated drinks
• 100 per cent for tobacco products
• 100 per cent for energy drinks.

Excise tax will apply at a rate of 100% to the retail selling price of tobacco products.

Who should register for Excise Tax in the UAE?- How to register for excise tax in UAE?

Businesses required to register for excise tax are as per the  UAE Federal Decree Law No. 7 of 2017 on Excise Tax, registering for excise tax is the responsibility of any business engaged in:

• the import of excise goods into the UAE
• the production of excise goods where they are released for consumption in the UAE
• the stockpiling of excise goods in the UAE in certain cases
• anyone who is responsible for overseeing an excise warehouse or designated zone i.e. a warehouse keeper.

FTA is committed to providing extensive support and guidance to assist with this; however, the responsibility lies with the business to make sure that any required compliance obligations are fulfilled.

FTA has the power to conduct audits of taxable corporates and subsequently impose penal measures on those that do not comply with the law.

Will excise tax be payable by travellers entering the UAE?- How to register for excise tax in UAE?

• Travellers entering the UAE with excise goods for non-business purposes will not be required to register as an importer of excise goods.
• Travellers may need to pay the excise tax due on the goods depending on the value of the goods being imported. Where the value of the goods is below the threshold for exemption from Customs Duty as per the Customs Laws, no excise tax is due.
• Where the value of excise goods exceeds the value of the exemption for Customs Duty purposes, then excise tax will be due on the total value of the goods.
• Physical payment of excise tax will be required before or at the time of import. Further details on the channels that will be available for travellers or non-registered persons to pay the excise tax liability will be released in due course.

How to register for excise tax in UAE?

Businesses can register for excise tax through the e-services section on the FTA website. However, first, they need to sign up and create an account

When to register for Excise Tax in the UAE?

The Registration for Excise Tax in the UAE has started from 17^th September 2017.  All Taxable entities are entitled to register for Excise tax through the FTA’s online portal. The Excise Tax Federal Decree-Law No. (7) of 2017 in the UAE shall be effective from 1^st October 2017. Hence the registration has to be done on or before 30^th September 2017.

 Information and documents to be given while registering for Excise Tax- How to register for excise tax in UAE?

An applicant while registering for Excise Tax should provide following:

• Details of the applicant (name / legal type / other legal details)
• Contact Details
• Banking information
• Business Activity & related information
• Customs Registration details
• Declaration

Businesses are required to have the legal documents relating to the Entity.

For example:

• Trade License
• Certificate of Incorporation (if you have)
• Articles of Association
• Partnership Agreement
• Document of Ownership
• Emirates ID etc
• Customs Registration Document or Customs Number
• Power of Attorney if applicable

Registrations and payments:

• Manufacturers and importers of certain ‘excise goods’ will be subject to excise tax, as will the release of those goods from a designated zone and the stockpiling of those goods in certain cases.
• Registration has already started on September 17, 2017. Anyone currently engaged in those activities must ensure that they register immediately through FTA.
• Importers and manufacturers are liable to make a number of pre-declarations prior to the filing of the tax return which will be largely automated based on the pre-declarations.  For imports in particular this requires moderately substantial compliance requirements for each import and therefore businesses should analyze their ability to meet those requirements urgently.

Retailers:

• Retailers will not have any tax obligations under the excise tax law as long as they are not considered to be “stockpilers”.
• A “stockpiler” is the owner of “excess excise goods”. “Excess excise goods” is when the quantity of goods owned exceeds the business’ monthly stock level of the past 12 month period from 1 September 2016 to 31 August 2017.
• Plus, if the business owns more than 2 months’ supply of excise goods then any excise goods in excess of the 2 months’ supply will be considered “excess excise goods”.
• Retailers should consider whether they will fall within the definition of a ‘stockpiler’ at the soonest to ensure registration if necessary.

Record-Keeping and Evidential Requirements

1.The Taxable Person shall keep the following records:

1. Records of all produced, imported or stockpiled Excise Goods;
2. Records of exported Excise Goods and evidence of such Export;
3. Records of stock levels, including details of lost or destroyed items;
4. A Tax Record that includes the following information:

1) Due Tax on imported Excise Goods.

2) Due Tax on produced Excise Goods

3) Due Tax on Excise Goods that have been stockpiled

4) Deductible Tax according to the provisions of Article (16) of this Decree-Law.

2. The Council of Ministers shall specify, at the suggestion of the Minister, the Excise Goods that should be marked to indicate that Tax has been paid on them as well as the requirements conditions and procedures related to the marking of such goods
3. The Executive Regulation of the Decree-Law shall specify the timeframes, conditions, and provisions for retention of records .

Violations and Penalties

Administrative Penalties Assessment

The Federal Tax Authority shall issue an Administrative Penalty Assessment to the Taxable Person, and notify the the same within five business days from the date of issuance, if the Taxable Person committed any of the following violations:

1. Failure by the Taxable Person to display prices of excise goods inclusive of Tax .
2. Failure to comply with the conditions and procedures related to the transfer of Excise Goods from a Designated Zone to another and the mechanism of preserving, storing and processing such Excise Goods.
3. Failure by the Taxable Person to provide the Authority with the price lists of Excise Goods produced, imported or sold thereby, as specified in the Executive Regulation of the Decree-Law.

Instances of Tax Evasion

A Person shall be deemed to have committed Tax Evasion if he conducts any of the following acts:

1. Bringing or attempting to bring Excise Goods into or out of the State without payment of the relevant Due Tax in part or in full.
2. Producing, transferring, acquiring, storing, transporting or receiving Excise Goods the Due Tax of which was unpaid with the intention of avoiding the payment of Due Tax.
3. Placing false distinguishing marks on Excise Goods, not stating Tax Registration Number on correspondence, with the intent of evading the payment of Due Tax or receiving unlawful refunds.
4. Submitting any false, counterfeit or unreal documents, returns or records, with the intent of evading the payment of Due Tax or receiving unlawful refunds.

It is imperative that any business operating in the UAE that is required to register for excise tax purposes should take immediate steps to become compliant with the Excise Tax Law and its Executive Regulations.

Businesses should also initiate an excise tax impact assessment immediately in order to determine the potential operational and commercial implications of this new tax regime and the steps required to achieve sustainable tax and regulatory compliance.

Reach Accounting Software

Need to upgrade to Reach Online Accounting Software :

Reach Accountant software is well designed to match all the needs for successful running of the business. The software can be used in different industries ,traders ,manufacturers, retailers,  workshop ,business projects etc. It is an accounting software that can automatically manage your book of accounts, taxes, inventory, sales, purchases and more online quickly and securely

Top Features of the Online Accounting Software are:

• Accounting Management: All functions relating to accounts are inbuilt with the software. You can manage your Accounting Ledgers, Bank & Cash Operations, Purchase & Sales Estimates, Warehouse Allocations, Expense Recording, Expense Grouping, Payments – Part or Full, Journal Entries, Income and loss a/c, Balance sheets, Receipts – Part or Full, Contra Entries, Financial Reports, Day book.

• Tax Management: Our accounting Software automatically calculates the taxes relevant for every bill created. The Software is designed as per the government norms for calculation of Excise tax. It also has the option to add any number of taxes relevant to the business. In case of change in tax percentages a change it in the software on your own. All you have to do is add your tax percentage and our software will calculate the taxes automatically. This multiple tax scheme can also be applied to multiple products on a single purchase.

• Income Management: The Company can create Quotations then the same can be converted as a Sales order or Pro-forma invoice or Invoice. From Invoice you can create Receipts as well. Accountants will be able to know what payments have been received and what are pending in the reports. You can also set reminders for receiving payments.

• Expense Management: You can create Purchase Orders then the same can be converted as bill or payments. You can also create Debit notes for purchase returns. Accountants will be able to know which purchase bills have been paid and which are pending in the reports. You can also set reminders for making payments.
• Invoicing: Generates EXCISE TAX compliant invoice of the company in the specified design as requested by the client or can choose from the available templates in the software. It also converts quotes to invoice .One of the features is the software can convert the Foreign currency invoices to base currency and further calculating the EXCISE TAX at UAE standard rate.

·         Print Tax Invoice In Arabic: Reach software lets you print invoices in Arabic, English or both, as per the mandated guidelines of GAZT and FTA.

• Auditor View: Full-fledged Financial reports, Tax reports EXCISE TAX reports, read process by auditor, with e-filing options, PF & ESI Reports, Tax Consulting Modules are some to be named.
• Check Post for EXCISE TAX returns: As the software has been designed exclusively to aid individuals and entities to be EXCISE TAX compliant in UAE, the set of rules and regulation laid by FTA (Federal Tax Authority) of UAE are embedded in the software. Hence any process error will be popped up by the application can be viewed .For instance wrong Tax Registration Number, incorrect taxable figure, wrong taxation period.
• Automatic Update on Tax legal Sections: As the Reach software are cloud computed software gets upgraded to update any revised tax laws and section if any in future.
• Computation Of EXCISE TAX Returns: The software is inbuilt with all the detailed crucial information  on tax computation Tax Assesee can  fetch all the details of all the taxable transactions It lists down transactions which are included and excluded in the EXCISE TAX return  calculate input tax, reverse charge and output tax to avail claim if any 

• Filing Of EXCISE TAX Returns: The registered businesses in UAE are required to generate the EXCISE TAX return File from their accounting software, login to the FTA’s e-tax portal and upload the return file. On the basis of the uploaded return file, the e-tax portal will validate the file and accordingly the details from the file will be auto-populated in the online return form. Reach EXCISE TAX software is designed to ease the process of filing returns and comes under the purview of FTA prescribed set of rules and regulations.

• Receipt: Receipts can either be manually entered or imported it in excel format easily.
• Payments: Payments can either be manually entered or imported it in excel format easily.
• Multi Company: Manage business through comfort of the smart phone.
• Tally Import: Tally files can be easily imported to Reach Software of various periods and manage business easily.
• Auditor’s Report: Full Financial Report are available,Read process by Auditor,Tax Reports,EXCISE TAX Report with e-filing options,PF & ESI Reports,Tax Consulting Modules are some features mentioned.
• Mobile Application: Access business information through tabs and android smart phones, pick photos of expense vouchers and attach to expenses, daily profitability and other key reports can be viewed on phone.
• Bank Synchronization: Bank Statements can be imported in to Reach software through excel files.
• Security: There is complete security of data stored in the hard disk. Data can be accessed and control by creating access restriction. One time password facilities also ensures a check in the log in to the website. 

• Run Business from anywhere: The business can be run access data from anywhere at your comfort. Just like checking mails from the laptop or systems.

• Free and Automatic Upgrades: At Reach Accountant you will be provided free services of upgrading the software frequently with new features and use it absolutely free. 

• No investment in expensive hardware: The software is browser based. It just requires internet connection which can be connected to multi computers without using LAN and servers. 

• API: The client can integrate the existing software with Reach accounting application , 

• Automatic Data Backup: Reach stores all the data in servers offsite with regular backups. Hence business information is safe and secure

·         User Interface & Complexity:The software is designed to make its use friendly and easy,no cumbersome process to operate the application and software.

• Scalability:It is an EXCISE TAX accounting software which can scale with your business needs. . Some software companies offer only one version of the product and some have progressive versions depending the business type or size. Reach Accounting software offers both integrated an entry level version as well as a feature rich version which you might not need for the current business processing but will definitely need in future for business development.

Top Two Features of the Reach Accounting Software

• Outsourced Accounting: The software enables to finish the outsourced accounts in less than 30 minutes.

• Real Time Accounting: Allows client to record sales and purchases online, while finalizing accounts that is checking the Audit trail, providing MIS reports, checking Tax reports, printing financial reports and filing taxes.

Technology Used

Reach has implemented the latest technology Cloud Computing to handle  day to day business transactions just  a click away from your browser from any part of the world.

Cloud Computing is a concept through which organizations can manage their data centres, processes and applications online via internet on the scheme of pay for use basis.

Advantages of Cloud Accounting Software:

– Nothing to install. Just signup and start entering your transactions
– You don’t have to worry about upgrades as all changes are pushed automatically. Online softwares are always up to date.
– Can be accessed from any internet enabled device at any point of time
– Cloud accounting software providers take care of backup and maintenance which is a cost saving for you.
– Data across all your offices is always synchronised.
– It can integrate with other cloud based applications.

Pricing:

AED 1800 single user, per year
AED 3600 five users, per year
AED 5000 unlimited users, per year