Ministry of Finance explains excise tax developments | KPMG | AE

Tax Alert: Ministry of Finance explains excise tax developments

Ministry of Finance explains excise tax developments

The UAE’s Ministry of Finance has held an excise tax awareness session to explain the new excise tax system for anyone involved in the importation, production and sale of excisable goods.

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Ministry of Finance explains excise tax developments

The UAE’s Ministry of Finance has held an excise tax awareness session to explain the new excise tax system for anyone involved in the importation, production and sale of excisable goods.


Under the new excise tax treaty, an excise tax will be imposed on goods considered harmful to human health and the environment, as well as on luxury goods. While each GCC country can individually decide tax rates and which goods are taxable, excise taxes have been capped at 100 percent.
The draft excise tax law was approved by the Federal National Council in March 2017 and the final excise tax law is expected to be published before 30 June 2017.


Proposed excise tax rates in the UAE – to be imposed on top of retail sale prices – are:

  • 100% for tobacco and tobacco products
  • 100% for energy drinks
  • 50% for carbonated drinks

Where there is no retail sale price, the average price of the good will be used to assess its excisable value.

Where goods are imported into the UAE, the importer is responsible for paying the correct excise tax to the Federal Tax Authority (FTA) before removing the goods from the designated storage area. For locally produced goods, the producer must pay the excise tax to the FTA before removing the goods from the place of production.

A tax procedure law for the UAE, regulating all taxes including VAT and the excise tax, has also been approved and will be publicly available shortly.
Excise taxes will significantly impact customer prices on the three categories of goods. Businesses dealing in these goods should carefully review their pricing strategies, determine the full impact of the excise tax and ensure they understand what needs to be done to be fully compliant.

Read a more in-depth explanation of the new excise tax law.


KPMG will continue to keep you informed of excise tax developments. If you have any questions, please do not hesitate to contact us.

Our Lower Gulf tax professionals combine international experience with local knowledge to provide viable commercial tax strategies.

News | Tax alert

News | Tax alert

KPMG's Tax alert examines and discusses the recent tax developments in the UAE and the wider GCC region.

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