UAE President issues law on tobacco, energy, soft drinks
Published: Mon 21 Aug 2017, 5:44 PM
Last updated: Tue 22 Aug 2017, 7:36 PM
The President, His Highness Sheikh Khalifa bin Zayed Al Nahyan has issued a Federal Decree-Law on excise tax, which will be imposed on selected products that are seen as being harmful to a consumer's health.
This will be determined by the Council of Ministers and recommended by Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai and UAE Minister of Finance, and Chairman of the Federal Tax Authority (FTA).
As per Federal Decree-Law No. 07 of 2017, excise tax rates that shall be imposed on the excise goods, which, along with the method of calculating the excise price, are subject to a decision by the Council of Ministers, upon the recommendation of the Minister of Finance, provided that the tax rates do not exceed 200 per cent of the excise price. At its thirty-seventh meeting, in December 2016, the Supreme Council of the Gulf Cooperation Council, GCC, issued a resolution on excise goods list, which contains tobacco products, energy drinks and certain soft drinks.
"As President His Highness Sheikh Khalifa issues Federal Decree-Law No. 07 of 2017 on Excise Tax, the UAE takes a great leap forward," said Sheikh Hamdan bin Rashid Al Maktoum. "We are making remarkable progress in our plans to establish a sound legislative infrastructure to support the UAE's tax system and make sure it meets and exceeds international best practices."
He added that the excise tax, in particular, will help to build a healthier and safer society. "This tax is set to discourage the consumption of products that negatively impact the environment and, more importantly, people's health, while the revenues it generates will go towards supporting advanced services for all members of society."
The new legislation requires excise tax to be imposed on certain activities around specific excise goods, activities such as the production or importation of excise goods in to the UAE, as well as the stockpiling of excise goods in the UAE, where these activities occur in the course of doing business.
The due tax is, moreover, the responsibility of the person who conducts any of these activities, or, if said person fails to meet their obligations, a person involved in any of the activities. In the event that excise goods are released from a designated zone (and where payable tax has not been paid previously), the onus is on the warehouse keeper to pay the tax.
The FTA may exempt a person from registration, but not payment of tax, if they can demonstrate that they will not regularly import excise goods. However, anyone who has been exempted from tax registration must immediately inform the authority of any changes to his/her circumstances that would make them subject to tax, and they must do so within the allotted timeframe and in accordance with the procedures stated in the executive regulation of the decree-law.
A registered taxable person shall apply for a tax deregistration when no longer liable for excise tax according to the decree-law and within the timeframe stated in the executive regulation. Moreover, the law states that any person operating or intending to operate a designated zone must apply for registration as a warehouse keeper before acting as such, and the executive regulation of the decree-law shall specify the effective date of registration. The Federal Decree-Law No. 07 on excise tax is available online on the Ministry of Finance website.