What is excise tax?

An excise tax is an indirect tax charged on the sale of a particular commodity. The government has announced the implementation of excise tax on selective items such as tobacco, energy drinks and fizzy drinks. The Federal Tax Authority(FTA) has decided to introduce excise tax in the UAE from 01 October, 2017. How to file Excise Tax Return in UAE is discussed below.

Difference between VAT and Excise tax

The Excise Tax is different and separate from the Value Added Tax (VAT).

VAT is applied at each level in the supply chain whereas the Excise tax is applied only once either at the initial stage or at the consumption level.

The introduction of the Excise Tax will enable achievement of two fundamental Government policy objectives, to raise Government revenues and also to discourage the consumption of goods considered harmful to health or the environment. This is an important policy reform in the UAE aimed at promoting economic growth and fiscal stability.

Excise Tax Rates- How to file Excise Tax Return in UAE

Below mentioned goods are charged with excise tax in UAE, with the corresponding rates

• Carbonated drinks – 50%
• Energy drinks – 100%
• Tobacco – 100%

Business to register for Excise tax?- How to file Excise Tax Return in UAE

Businesses   transacting the below activities  should  register for Excise tax:

• Manufacturers of excise goods.
• Importers of excise goods.
• Stockpilers of excise goods.
• Warehouse keepers responsible for excise goods.

Payment of Excise Tax- How to file Excise Tax Return in UAE

The Excise tax  should be paid  in the following cases:

• Excise goods are imported into the UAE;
• Excise goods are released for consumption in the UAE (e.g., manufactured and released from a designated zone/excise warehouse, etc.); or
• Excise goods have been acquired by a stockpiler, (the tax has not previously been paid on those goods).

As the excise tax is not a transaction-based tax, goods do not have to be sold in order for the tax to be due.

Who is a stockpiler?

If person or business that deals with excisable goods has stocked excisable goods and cannot prove that the Excise tax has been already paid for the same, then they are known as a stockpiler.

Designated zone/excise warehouse- How to file Excise Tax Return in UAE

A designated zone is a warehouse, zone or area inside the UAE where the Excise tax will not be applicable. It is also known as an excise warehouse.

Goods held in these designated zones and the transfer between them will not be subject to Excise tax. The tax will be only imposed when these goods leave the designated zone and enter free circulation in the UAE.   The FTA takes the responsibility to register and approve an area to be a designated zone. FTA will also appoint warehouse keepers for particular zones, and thus they will be in-charge over that zone.

Types of Excise Taxation- How to file Excise Tax Return in UAE

There are two methods of charging Excise Tax on goods, Specific or Ad valorem basis.

Specific excise taxes are charged by quantity regardless of price, i.e., per unit, pack, or kilogram.

Ad valorem excise taxes are charged as a percentage of the value of the product: Ad valorem tax = Number of units or other measurement x Selling price at any specific value per unit x Ad valorem tax rate.

The levy of Excise Tax in the GCC will be on the ad valorem basis. For example, if 100 kg of taxable products are sold at AED 100/kg and if the tax rate is 50%, the excise tax will be AED 5,000 [ 100kgX AED 100/ X 50%].

 Transactions exempt from Excise tax?

Some transactions that are typically exempt from Excise Tax are, for example, when supplies are sent to diplomatic missions or when a travellers’ allowance is issued.

Also, business which does not regularly import excisable goods may apply to the FTA for an exemption from registration and thus will only have to pay the Excise Tax when they import goods into the UAE.

When does the registration for Excise Tax start?- How to file Excise Tax Return in UAE

Registrations for Excise tax has opened on 17 September 2017. Manufacturers and importers of excisable goods will have to register for Excise tax purposes through an online system provided by the Federal Tax Authority (FTA).

What is the threshold limit for Excise Tax registration?

Excise Tax doesn’t have any registration threshold. Hence, any business that is engaged in importing, exporting, manufacturing, trading, storing or transporting of excisable goods must register for the excise tax.

What will businesses have to do if they are required to pay excise tax?

Businesses those who are required to pay excise tax, have to:

• Register with the FTA
• Submit excise tax returns on a monthly basis; and
• Pay the excise tax due on the same date as submitting a tax return.

How to file Excise Tax Return in UAE

The business should electronically file Excise Tax returns on a monthly basis and, within 15 days of this filing, the tax due should be electronically paid to the UAE Federal Tax Authority (FTA).The authority has stressed the necessity of filing returns regularly before the 15th of every month for the previous tax period. All businesses registered for Excise Tax must pay the due tax on excisable goods (50 per cent on carbonated drinks, 100 per cent on tobacco products and energy drinks) to avoid penalties .

This guide will help you complete your Excise Tax registration, amendment

Create an e-Services account

• Sign up by creating a username/password
• Verify your email address within 24 hours
• Log in to your e-Services account

 Registering for Excise Tax

• Click Register for Excise Tax
• Complete all mandatory fields (marked with *)
• Click Submit for Approval once to submit the form

Late Registration Penalty Payment

• Go to the Dashboard tab to view the “Late Registration Penalty” amount mentioned under the Excise Tax box (where applicable).
• Click on ‘Pay’ button to proceed with payment.

Amending approved Excise Tax registration form

• Click ‘Edit’ to amend certain editable fields.
• Once all necessary amendments are made, click ‘Submit Changes’
• Amendments take immediate effect.

Penalties for Violation of Excise Tax– Federal Decree Law No. (7) of 2017

According to this, the failure of the registrant to submit the tax return within the timeframe specified in the Tax Law will subject them to an automatic Dh1,000 penalty in the first time and Dh2,000 in case of repetition within 24 months.

The Cabinet Decision also states that if a taxable person fails to settle the payable tax stated in the submitted tax return or tax assessment of the company , within the timeframe specified in the tax law, he will be obliged to pay a late payment penalty of 2 per cent of the unpaid tax – due immediately once the payment of payable tax is late; 4 per cent, due on the seventh day following the deadline for payment; and a 1 per cent daily penalty will be charged on any amount that is still unpaid one calendar month following the deadline for payment, with the upper ceiling being 300 per cent.

Businesses are also required to ensure the accuracy of the data being submitted, as the submittal of an incorrect tax return by the registrant can incur a fixed penalty of Dh3,000 plus a percentage-based penalty of up to 50 per cent of the amount unpaid.

Need to upgrade to Reach online VAT 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 Reach Online VAT 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 VAT. 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 VAT 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 VAT 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 VAT reports, read process by auditor, with e-filing options, PF & ESI Reports, Tax Consulting Modules are some to be named.
• Check Post for VAT returns: As the software has been designed exclusively to aid individuals and entities to be VAT 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 VAT 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 VAT return  calculate input tax, reverse charge and output tax to avail claim if any

• Filing Of VAT Returns: The registered businesses in UAE are required to generate the VAT 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 VAT software is designed to ease the process of filing returns and comes under the purview of FTA prescribed set of rules and regulations.

• * VAT Reports etc.
• Calculate VAT automatically.
• VAT support in Sales, Purchase, Sales and Purchase returns, Journal entries.
• Generate Federal Tax Authority compatible tax reports.
• VAT Paid (charged by suppliers) and Vat Collection (Charged to customers) Analysis.
• Transaction wise details of VAT paid and VAT collected.
• Attach every Vendors/Customers VAT number and other details.
• VAT supported for Goods (stocked) and Service (non-stocked) items.
• Online application accounting.
• VAT Account Reconciliation, VAT Collection & VAT Paid analysis report.
• Report export to excel and other standard formats.
• VAT returns statement compatible with Federal Tax Authority standards.

Online accounting VAT software enables you to file vat returns, manage accounts and other business operations from any geographical area be it at the comfort of the house.

• 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,VAT Report with e-filing options,PF & ESI Reports,Tax Consulting Modules are some featuress 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 VAT 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. Many of today’s small businesses find great advantages when adopting a virtual office environment. Rather than maintaining one centralized business location, employees are given the opportunity to work from home and connect via computer. Virtual offices can stretch across the country, or even exist within a small geographic area while still providing benefits to both employees and employers. Yet certain business functions need to be managed differently in a virtual environment. When it comes to accounting, a cloud system can improve virtual office management, especially for tasks such as expense tracking and financial report consolidation.

  Benefits of Cloud Accounting

  1. Spread the cost of the software by making payments by monthly subscription instead of one lump sum.
  2. All the upgrades for cloud accounting software are carried out by the supplier at no extra cost, so you are always on the latest version.
  3. You can access cloud accounting software anywhere that has an internet connection, so no need to use a particular computer or be stuck in the office.
  4. As the name suggests, all the data is stored securely in “the cloud” which means on the supplier’s bank of servers, continually backed up, so you never have to worry again about using up your own hard-drive or taking regular backups.
  5. Best of all, with cloud accounting software, your accountant can share your data, so they can help you if you are stuck on recording certain transactions in your accounts, like the purchase of a new laptop.  They can post their year-end journals directly, so your data is always up to date, but more importantly we can be more help to you.  For example if you would like your accountant to check the figures for your VAT Return or even file it,or prepare some management accounts for you, and even help you with key decisions in your business, the sky is the limit with cloud accounting software.