What is Excise Tax?- How to get excise Tax Refund in UAE

Excise tax is a form of indirect tax levied on specific goods, which are harmful to human health or the environment. Such goods include carbonated drinks, energy drinks and tobacco products.

Rate of excise tax- How to get excise Tax Refund in UAE

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.

 Need For Excise Tax– How to get excise Tax Refund in UAE

The UAE Government   levied excise tax to reduce consumption of unhealthy and harmful commodities and also raising revenues for the government being beneficial for public services. 

Types of Excise Taxation

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.

 Threshold limit for Excise Tax registration- How to get excise Tax Refund in UAE

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.

Registration Of Excise Tax- How to get excise Tax Refund in UAE

According to the UAE Federal Decree Law No. 7 of 2017 on Excise Tax, any business engaged in below mentioned activities should register for excise tax:

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

Registering for Excise Tax in the UAE- How to get excise Tax Refund in 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  is effective from 1^st October 2017.

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.

Information and documents to be given while registering for Excise Tax

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 

Record-Keeping and Evidential Requirements for Excise Tax

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 .

The calculation of the Excise Tax payable is based on completing the below forms (as applicable):

• Excise declaration forms
  (requiring customs clearance) for importing excisable goods and/or the release
  of excisable goods from designated zones
• Excise liability forms for tax liability on the production of excisable goods and/or the release of excisable goods from designated zones without customs clearance
• Excise Tax due on stockpiling of excise goods– a separate form for declaring stockpiled goods is not required. The taxable person can manually input the tax due from stockpiling excise goods
• Deductible Excise Tax

It is worth noting that the due date to file Excise Tax returns is the 15th day of every month (i.e. the first return would then be due by 15 November 2017).

How to get excise Tax Refund in UAE

Excise tax is paid only once in the supply chain. Hence, all businesses that deal in excisable goods cannot obtain a refund of the excise tax paid on those goods, unlike VAT.

Still there are some cases where a refund of excise tax will be available:If Excise tax has been already paid on an excise good, which is then produced in to a ‘new excise good’, on which excise tax is again due (e.g., Excise tax will be due on both the import of raw tobacco and once the tobacco has been manufactured into cigarettes).

• If Excise tax has been already paid on an excise good which is then exported outside the UAE.
• If there is an error while paying tax to the FTA.

In these scenarios, a business registered for excise tax can get the refund of the excise tax paid. The refund will be granted by allowing a deduction of the refundable amount from the tax due in the next excise tax return period.

Can I get a refund, if I’m not registered for excise tax?- How to get excise Tax Refund in UAE

There are a limited number of cases where businesses can get refunds if they are not registered for excise tax. Those are:

• If excise tax has been paid by certain international governments, diplomatic missions and international organizations in the course of their official activities, where a reciprocal agreement is in place between the UAE and the entity’s home country.
• If business owner who is registered for excise tax in another GCC country, has paid the excise tax in the UAE, and has exported the excise goods out of the UAE.

A refund request form will be available on the FTA website that can be used to request refunds.

When will Excise tax be suspended?

Excise Tax is normally waved off when excisable goods are located in a tax warehouse or transported between tax warehouses. The Excise Tax shall be imposed upon release of the excisable goods for consumption from the tax warehouse.

How to get excise Tax Refund in UAE

Purpose of the Claim

When a Taxable Person files his excise tax return and the value of his deductible tax exceeds the value of excise tax payable to the FTA, he will have excess refundable tax and may be entitled to use this form to apply for a refund of the excess refundable tax through the submission of this Claim.

 Timeframes

Where the Taxable Person makes a claim for a refund of excess refundable tax, the FTA will repay the money to the Taxable Person by the later of:

• 2 calendar months following submission of the claim for a refund; or
• Where the FTA undertakes a tax audit to verify the validity of the claim, within 21 calendar days of completion of the audit.

Submitting the Claim

1. Login to FTA e-Services Portal and access the form: go to ‘Excise Tax’ tab, then select the ‘Excise Tax Return and Excise Tax Refunds’ tab. Click on EX301 – Excise Tax Refunds to access the form.
2. Complete your Refund Form: Fill in each field on the form and click on ‘Save and Review’.
3. Submit the Form: using the button ‘Submit’.

Verifying your balance post the approval

Once you receive a confirmation email of the refund, you may check your balance through the ‘My Payment’ tab under the Transaction History section.

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 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 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.