Dubai: As excise tax is a tax which is only levied once in the supply chain, there is expected to be a refund mechanism for businesses which may have paid this tax more than once.
According to the excise law, the deductible tax is made up of tax paid on excise goods that have been exported, tax paid on excise goods that have been incorporated into another excise good where tax is or will be payable, and any amounts paid in error. The Taxable Person must submit a Tax Return to the Authority at the end of each Tax Period and settle the Payable Tax appearing in the Tax Return within specific timeframes and according to procedures determined in the Executive Regulation.
The Taxable Person must carry forward any excess Refundable Tax to subsequent Tax Periods and offset such excess against Payable Tax or any Administrative Penalties imposed under the Decree-Law or the Federal Law No. 07 of 2017. This offset shall take place if the Taxable Person’s Deductible Tax exceeds the Due Tax for the same Tax Period and if the Tax paid to the Authority by the Taxable Person exceeds the Payable Tax.
If there remains any excess for any Tax Period after being carried forward for a period of time, the Taxable Person may apply to the Authority for a refund of the remaining excess as per the timeframes and procedures stated in the Federal Law No. 07 on Tax Procedures and its Executive Regulation.
The Authority may refund the Tax based on an application submitted by foreign governments, international organisations, diplomatic bodies and missions — on condition of reciprocity — for Tax paid in the course of their official activities. Tax may also be refunded to Persons registered in another GCC country implementing excise tax, provided they have paid the Excise Tax in the UAE, exported the products to that other GCC country and paid the tax to that other GCC country.
The new Law determines a set of violations that will entitle the Authority to issue an Administrative Penalty Assessment to the Taxable Person, and notify them within five business days, as per the provisions of the Federal Law No. 07 of 2017 on Tax Procedures. Such violations consist of: Failure by the Taxable Person to display prices inclusive of Tax; failure to comply with the conditions and procedures related to moving the Excise Goods from one Designated Zone to another, as well as with the procedures of keeping, storing and processing these Excise Goods; and failure by the Taxable Person to provide the Authority with price lists of Excise Goods they produce, import or sell.
The law on excise tax reinforces the same penalties on tax evasion stipulated in Federal Law No. 07 of 2017. A Person shall be deemed to have committed Tax Evasion if they bring or attempt to bring Excise Goods into or out of the UAE without payment of Due Tax in part or in full; produce, transfer, acquire, store, transport or receive Excise Goods where Due Tax was unpaid with the intention of avoiding the payment of Due Tax; place false distinguishing marks on Excise Goods, with the intent of evading the payment of Due Tax or of receiving unlawful refunds; and submit false or counterfeit documents, returns or records, with the intent of evading the payment of Due Tax or of receiving unlawful refunds.
The Taxable Person is required to retain the following records: Records of all produced, imported or stockpiled Excise Goods; records of exported Excise Goods and evidence of that export; records of stock levels, including details of items lost or destroyed; and Tax Records that include information regarding the Due Tax on imported Excise Goods, produced Excise Goods, Excise Goods that have been stockpiled, and deductible tax specified by the Decree-Law.
The Taxable Person, or any other Person with a written authorisation, must include the Tax Registration Number (TRN) on all correspondence and transactions with the Authority, as well as on all Tax Returns and any document related to Tax.