Understanding Record-Keeping and Evidential Requirements under Excise Tax Laws in the UAE

The introduction of Excise Tax in the United Arab Emirates (UAE) marked a significant shift in the country’s tax landscape, aiming to promote public health and enhance revenue generation. The Federal Decree-Law No. 7 of 2017, along with its amendment through Federal Decree-Law No. 19 of 2022, establishes comprehensive regulations governing the excise tax framework. Among the critical provisions outlined in these laws are the record-keeping and evidential requirements that all taxable persons must adhere to. This article delves into Chapter Ten, focusing on Articles 24 and 25, highlighting the importance of maintaining proper records and the implications for compliance.

Article 24: Record-Keeping and Evidential Requirements

Key Provisions

Article 24 mandates that taxable persons keep meticulous records related to excise goods. This encompasses:

1. Records of All Produced, Imported, or Stockpiled Excise Goods: Taxable persons must maintain detailed logs of their excise goods to ensure accurate tracking and compliance with tax obligations.
2. Records of Exported Excise Goods and Evidence of Such Export: This requirement ensures transparency in the trade of excise goods and provides a basis for verifying tax obligations related to exports.
3. Records of Stock Levels: Detailed records must be kept, including specifics about lost or destroyed items, to provide a clear view of inventory and its corresponding tax implications
4. Tax Record: This record is essential for calculating due taxes and must include:
   • Due tax on imported excise goods.
   • Due tax on produced excise goods.
   • Due tax on stockpiled excise goods.
   • Deductible tax as outlined in Article 16.

Compliance and Implementation

The Council of Ministers is empowered to specify which excise goods require marking to indicate that tax has been paid, alongside the relevant conditions and procedures. Additionally, the Executive Regulation of the Decree-Law will outline the timeframe and conditions for retaining these records, ensuring that taxable persons are well-informed about their responsibilities.

Article 25: Stating the Tax Registration Number

Article 25 emphasizes the importance of the Tax Registration Number (TRN). It is a mandatory requirement for taxable persons to state their TRN on all correspondence with the tax authority, tax returns, and any related documents. This provision is vital for ensuring proper identification and facilitating seamless interactions with the tax authority, thereby reducing the risk of errors and misunderstandings.

Article 25 (bis): Statute of Limitation

The statute of limitations under Article 25 (bis) outlines the timeframe within which the tax authority can conduct audits and issue assessments. The standard limitation period is five years from the end of the relevant tax period. However, exceptions exist, particularly in cases of tax evasion or registration failures, which extend the limitation period to fifteen years. This flexibility allows the authority to address non-compliance effectively while ensuring that taxpayers are not subjected to indefinite scrutiny.

Implications for Taxable Persons

1. Preparation for Audits: Taxable persons must maintain accurate and up-to-date records to facilitate audits and reduce the risk of penalties. The five-year limitation period emphasizes the need for diligent record-keeping.
2. Voluntary Disclosure: Taxpayers have the option to voluntarily disclose any discrepancies within the five-year period, which can mitigate potential penalties but must be submitted within specified timeframes.
3. Awareness of Rights and Obligations: Understanding the statute of limitations empowers taxable persons to manage their tax affairs proactively, ensuring compliance while also being aware of their rights regarding audits and assessments.

Conclusion

The provisions outlined in the Federal Decree-Law No. 7 of 2017 and its amendment through Federal Decree-Law No. 19 of 2022 reflect the UAE’s commitment to establishing a robust tax framework. By adhering to the record-keeping and evidential requirements detailed in Articles 24 and 25, taxable persons can ensure compliance, promote transparency, and mitigate risks associated with tax audits. As the landscape of excise tax continues to evolve, staying informed and prepared will be paramount for businesses operating in the UAE.

summary

This article explores the record-keeping and evidential requirements set forth in Articles 24 and 25 of the UAE’s Federal Decree-Law No. 7 of 2017 and its amendment, Federal Decree-Law No. 19 of 2022, related to excise tax. Article 24 outlines the necessity for taxable persons to maintain comprehensive records of excise goods, including production, importation, stock levels, and export documentation, along with a detailed tax record. Article 25 emphasizes the importance of stating the Tax Registration Number on all tax-related documents and interactions with the tax authority. Furthermore, Article 25 (bis) details the statute of limitations for tax audits, generally set at five years but extending to fifteen years in cases of tax evasion or registration failures. Overall, the article highlights the critical nature of proper record-keeping for compliance, transparency, and effective management of tax obligations in the UAE.

Disclaimer: The Content offer general guidance and should not be considered legal, financial, or tax advice. Consult qualified professionals for personalized guidance. While efforts have been made to ensure accuracy, no guarantee is provided for completeness or applicability to individual situations. Users are responsible for their interpretation and actions based on this information, at their own risk.

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