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Member Articles

Excise Tax

CA Gaurav Chugani observed that many businesses have inadvertently
missed reporting deficiencies within the prescribed
timeframe, resulting in the deemed release of excise
goods into free circulation due to procedural lapse. Many
“FTA released a much-awaited public clarification are still litigating on the fact that prior to September
(EXTP007) on the excise tax implication for the excise 2019 there was no excise tax declaration to report such
goods which are deficient/ missing along with the deficiencies within an excise DZ.
process for the destruction of excise goods within an Public clarification (EXTP007) provides clarity on a
excise Designated Zone (DZ). Since implementation of variety of issues. Below we have outlined noteworthy
the excise tax in the UAE (October 2017) there has been points:
an ambiguity on the excise tax treatment of deficient/
shortage of excise goods within an excise DZ. 1. Excise goods on which excise tax is paid and which
cannot be sold/ used during business (example expired
As per UAE excise tax and associated regulations, any excise tax paid stock) cannot get relief & excise tax
excise goods that are considered wastage/ deficient/ paid earlier on such goods would become a cost to the
there is a shortage of the expected quantity when businesses.
located within an excise DZ, will be treated by the
FTA as having been released for consumption and, 2. Deficiency/ shortage of excise goods may not be
therefore, will be subject to excise tax. However, there subject to the excise tax if the conditions as mentioned
is an exception provided in law which allows for a relief in Article 12 (5) of the excise tax Executive Regulations
to be granted from accounting for excise tax on goods are met and FTA is satisfied with the information
located within an excise DZ in certain cases. furnished. Excise declaration in form EX203B needs to
be filed within 30 days of the discovery of the deficiency
Relief is available where the warehouse keeper or shortage for availing excise tax waiver.
responsible for the excise goods intimates the
deficiency to the FTA in excise tax declaration EX In case there are any practical challenges in respect
203B within the specified timeframe (within 30 days of of deficiencies of excise goods within an excise DZ,
discovery of deficiency) stating the legitimate cause for businesses may reach FTA in the dedicated email
deficiency. As per our practical experience, we have address ([email protected]).”

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