Federal Tax Authority clarifies price-setting mechanism for Excise Tax

Dubai 3rd October 2017: Following the introduction of Excise Tax in the UAE on October 1, the Federal Tax Authority (FTA) has clarified that the Excise Goods Price List that is downloadable from its website is a reference for tax calculation only, and not for setting retail prices.

The FTA also clarified that the retail price subject to tax (known as Excise Price) of each taxable item must be the highest of following two prices: the local market price specified in the Excise Goods Price List, available at https://www.tax.gov.ae/excise-price-list-and-process.aspx; or the designated retail sale price as calculated by the retailer as per the procedure specified in the Taxable Persons Guide for Excise Tax https://www.tax.gov.ae/help_guides.aspx.

The FTA said that some brands of excise goods that are not yet on the list will be still subject to Excise Tax. The Authority requests that producers or importers of goods likely to be subject to Excise Tax, including energy drinks, carbonated drinks and tobacco products, inform the FTA through its website of brands that should be added.

“The registration process for Excise Tax is well on track and we now have an extensive database of excise taxable persons” said His Excellency Khalid Al Bustani, Director-General of the Federal Tax Authority. “That said, the FTA continues to receive applications for registration through our website, and we have already started receiving import declarations. We encourage all institutions that are subject to Excise Tax as per the law to register through the website, where, in addition to conducting their transactions seamlessly, they can gain access to a wealth of information, learn their rights and obligations and ensure their organisations are protected from penalties.”

H.E. Al Bustani went on to explain that: “fixing the prices of products for retail is not within the jurisdiction of the FTA, it’s the duty of other departments to monitor the prices according to the mechanism set out in the Federal laws.”

The list of retail prices used as a basis for tax calculation was compiled with cooperation of the retailers.

According to Cabinet Decision No. (38) of 2017 on Excise Goods, Excise Tax Rates and the Method of Calculating the Excise Price, from October 1, carbonated beverages are taxed at 50% and tobacco products and energy drinks at 100%. Carbonated beverages include all aerated beverages with the exception of non-flavoured aerated water, as well as any concentrates, gels or extracts that can be processed into carbonated drinks.

Energy drinks, meanwhile, include beverages that may contain stimulants or substances that induce mental or physical stimulation, including but not limited to: caffeine, taurine, ginseng and guarana, as well as any substances with similar effects.


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