Amendments to the Excise Tax Executive Regulations

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

• 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.

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

• 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.

• 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.

• 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.

• 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.

• 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.

• 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).