Article Posted date 06 December 2023
3 min read

In brief

The UAE Cabinet of Ministers issued Cabinet Decision No. 108 of 2023 on 6 November 2023, amending certain provisions of the Excise Tax Executive Regulations. We have summarized the key amendments and our comments below which have become effective from 1 December 2023 with the exception of refund provisions which will come into force on 1 June 2024.

Summary of amendments to the UAE Excise Tax Executive Regulations

 

Legislative reference

Topic

Key highlights and comments

Article 1

Introduction of new definitions
  • To provide more clarity, three new terms have been defined in line with the UAE VAT legislation – "official evidence," "commercial evidence," and "shipping certificate".

Article 5

Excise tax registration
  • Rejection of an excise tax registration application does not prevent entities from reapplying, nor does it mean that the entities can avoid compliance with excise tax provisions.

Article 6

Excise tax deregistration

 
  • The Federal Tax Authority (FTA) can now deregister a business after six months of ceasing relevant activities, unless intent to resume is proven.

Article 11

Stockpiling of excise goods
  • Failure to maintain audited records for stockpiled excise goods may lead to the FTA considering the entire stock as excess excise goods on which excise tax may become due in full.

Article 12

Natural shortages
  • Excise goods are no longer considered ‘released for consumption’ where there is a natural shortage in the quantity of excise goods, subject to meeting certain conditions.
This specific amendment is especially relevant for manufacturers of excise goods located in designated zones. The most likely beneficiaries are those dealing with tobacco products as these producers often encountered difficulties related to issues such as shrinkage or moisture evaporation of their products during storage.

Article 14

Exemption for exports

 
  • Documents required to claim exemption from excise tax on export of goods have been clearly specified and refer to the newly included definitions of official and commercial evidence.
With the new definition of official evidence, it is possible to rely not only on UAE official documentation, but also documents certified by authorities in the countries of destination.

Article 15

Designated zones

 
  • The requirement around financial guarantee has been amended and now can be requested by the FTA not only at registration, but also at the time of amendment or renewal of the designated zone status.
  • Further, a designated zone which fails to meet the conditions and requirements may be treated as mainland UAE for excise tax purposes.

Article 16

Deductible excise tax

 
  • Taxable persons may now claim deduction of excise tax paid on goods exported outside the UAE using the same documents required for claiming exemption.
  • The authority may also specify alternative forms of evidence if the submitted documents are insufficient.

Article 22

Excise tax refunds
  • Unregistered businesses will also be eligible to request for refunds for excise tax paid on goods exported outside the UAE, subject to meeting certain conditions.  
  • This amendment is effective from 1 June 2024.
Previously, only excise registered businesses were eligible for refunds, and therefore this is a welcome move, particularly for export traders (who are not producers or importers of excise goods and therefore are not eligible to register for excise tax).

These amendments signify a significant update to the excise tax landscape in the UAE. Many of the changes are either designed to formalize the trends we have seen the FTA apply when conducting excise tax audits on impacted taxpayers, but also recognize the need to provide relief to certain compliance challenges which have been faced by businesses in the past. It is crucial for businesses to review their operations and compliance strategies in light of these changes.

KPMG has a team of experienced excise tax specialists that can help you assess your current tax position, advise on the appropriate tax treatment, prepare clarification requests, or represent you in front of the FTA as registered tax agents.

We are happy to discuss your specific circumstances with you and determine the way forward should you have any questions or concerns in this regard. Please get in touch with your usual KPMG contact or any of the tax professionals below.

Contacts

Keith Donegan

Partner, Indirect Tax
KPMG Lower Gulf
Email

Julie Lere-Pland

Director, Indirect Tax
KPMG Lower Gulf
Email

 

Luis Miguel Sanchez de Alcazar Alonso

Director, Indirect Tax
KPMG Lower Gulf
Email

 

Keerti Ujwal

Director, Indirect Tax
KPMG Lower Gulf
Email