A Guide to New Amendments to the UAE Excise Tax Decree Law

The UAE Excise Tax regime is governed by the Federal Decree-Law No. 7 of 2017 (“Excise Tax Decree-Law”). However, the Federal Decree-Law No. 19 of 2022 has come into effect from October 14th 2022 amending certain provisions of the Excise Tax Decree Law. Tax consultants in Dubai can advise taxable entities on how to make tax-related decisions based on the amended provisions.

Businesses under obligation cannot ignore the new amendments to the UAE Excise Tax Decree Law as it may be viewed as a compliance failure. The Federal Tax Authority (FTA) has also released a Public Clarification (EXTP009) to remove any confusion regarding the new amendments. Based on the Clarification, we have created a guide to the new amendments to the UAE Excise Tax Decree Law. In this guide, we will discuss the key amendments to the UAE Excise Tax Decree Law.

Keep reading for further insights:

Exception from UAE Excise Tax Registration

Generally, only a person registered for excise tax can import excise goods or release excise goods from a designated zone. However, the new amendments have set out an exception for this general rule. As per the amended provisions, a person can be exempted from excise tax registration if the FTA thinks that the person does not import excise goods regularly. If an excepted person becomes liable for excise tax registration in the UAE later, the FTA should be informed of the change in circumstances that made the person liable for registration.

If a person imports goods for purposes other than conducting business, the FTA will exempt that person from tax registration. However, that person is required to pay the relevant Excise Tax on the import. An exception only means the qualifying person is excepted from the administrative action of tax registration and not from the liability to pay the excise tax or the relevant administrative penalties.

Payment of the Amount Received as Excise Tax

The new amendments state that a person receiving an amount as Excise Tax or issuing an invoice reflecting Excise Tax, must report and settle such amounts with the FTA, as it is treated as Excise Tax. This may, for example, include instances where a person collected Excise Tax in respect of goods which are not excise goods. Tax consultants in Dubai can help businesses in this regard.

Statute of Limitation

The UAE Excise Tax Decree-Law didn’t contain a provision for the Statute of Limitation. However, the new amendment has introduced a Statute of Limitation article that sets the maximum timeframe in which the FTA can act. The FTA will be precluded from taking any action (such as a tax audit or tax assessment) once the Statute of Limitation expires.

Generally, the FTA is not allowed to carry out a tax audit or issue a tax assessment after the expiration of 5 years from the end of the relevant tax period. However, as an exception to this rule, the FTA can conduct a tax audit or issue a tax assessment to the taxable person after 5 years from the end of the relevant tax period in the following situations:

  • The FTA has notified the taxable person of the tax audit before the 5-year period has expired, given that the tax audit is completed, or the tax assessment is issued, within four years from the date of the notification of the tax audit
  • The tax audit or the tax assessment issuance is related to a voluntary disclosure submitted in the fifth year from the end of the relevant tax period, given that the tax audit is completed or the tax assessment is issued, within one year from the date of submission of the voluntary disclosure. However, the person is not allowed to submit a voluntary disclosure after five years from the end of the relevant tax period
  • In tax evasions cases, the FTA can conduct a tax audit or issue a tax assessment within 15 years from the end of the tax period in which the tax evasion occurred
  • If  a taxable person fails to register for excise tax, FTA may conduct a tax audit or issue a tax assessment within 15 years from the date on which the taxable person should have registered for Excise Tax

When can a Statute of Limitation be Amended?

The UAE Cabinet can amend a Statute of Limitation in instances where a taxable person was notified of an audit before the expiry of the 5-year period, or where a taxable person submitted a voluntary disclosure in the fifth year following the relevant tax period. In such a case, the Cabinet will issue a Decision to amend the period set out for the completion of the Tax Audit or the issuance of the Tax Assessment as per relevant provisions in the Law. In all cases, the statute of limitation will be amended if any of the reasons stated in Federal Law No. 5 of 1985, promulgating the Civil Transactions Law and its amendments, occur. Get the help of tax consultants in Dubai for further clarification in this matter.

Consult with the Best Tax Consultants in Dubai, UAE

Businesses need to consider the new amendments before taking any decision related to excise tax in the UAE. Tax consultants in Dubai such as Jitendra Chartered Accountants (JCA) can advise you on the potential impact of the new amendments on your business and assist you in taking necessary actions. JCA is one of the top tax firms with an FTA-approved tax agent in Dubai. Our excise tax consultancy services in Dubai include excise tax registration, timely submission of excise returns, review of excise records, return & reconciliation, providing advice on client’s clarifications and FTA notifications, representing the client before the FTA for Excise tax matters, review and customization of source documents etc.