Provisions on Tax Payment, Stockpiling, and Release of Goods 

The Federal Decree-Law No. 7 of 2017, governing Excise Tax in the UAE, is a crucial framework for businesses dealing with excise goods. Its Executive Regulation provides detailed rules on tax payment, stockpiling, and the release of excise goods for consumption. Here’s a breakdown of key articles from the regulation that every business should be aware of. 

Stockpiling 

Definition of Stockpiling: A “Stockpiler” is defined as a person who holds “excess Excise Goods” in free circulation where the tax has not been paid, exempted, returned, or deferred. Excess Excise Goods are those that: 

• Were owned by the stockpiler on the earliest date when a tax obligation arose, or when the Decree-Law came into force. 

• Exceed the average monthly stock level for the past 12 months, whether purchased or produced. 

• Were acquired before the specified date and are intended for sale in the course of conducting busines

Special Considerations: If the average monthly sales of excise goods exceed two months of the average sales figure, any goods beyond this threshold are considered excess, and tax is due in full. 

Record-Keeping Requirements: Businesses must maintain audited records showing their stock levels from the date the Decree-Law came into force. Failure to do so may result in the entire stock being deemed excess, with tax implications. 

Release of Excise Goods for Consumption 

Criteria for Release: Excise Goods are considered released for consumption when: 

• Produced in the UAE, or 

• Released from a Designated Zone into free circulation. 

Production and Designated Zones: Goods are deemed produced when they are ready for retail sale, fit for consumption, or prepared for sale if combined with another product. Goods leaving a Designated Zone are considered released for consumption if: 

• They exit the zone without being moved to another Designated Zone or exported. 

• They are consumed or sold within a Designated Zone. 

• There are irregularities or deficiencies detected in their quantity. 

Handling Deficiencies: If deficiencies are due to justified causes or natural shortages, businesses must notify the Authority within 30 days. Deficient goods may be destroyed with the Authority’s approval if they are not inspected within the specified period. 

Inclusion of Tax in Advertised Prices 

Exclusions from Tax Inclusion: The advertised price of Excise Goods should not include Excise Tax in certain scenarios: 

• When goods are to be incorporated into another excise good on which tax is due. 

• If goods are to be exported outside the UAE. 

• If the purchaser is entitled to a tax refund (e.g., foreign governments, diplomatic missions). 

• For onward sales of excise goods. 

Tax Due: In these cases, tax is additional to the advertised price and must be paid by the purchaser. 

Conclusion 

Understanding and adhering to the Executive Regulation of the Federal Decree-Law No. 7 of 2017 on Excise Tax is crucial for businesses involved in the production, distribution, or sale of excise goods. From proper stockpiling and record-keeping to comprehending the nuances of tax inclusions in advertised prices, compliance ensures smooth operations and avoids unnecessary tax liabilities. Staying informed about these regulations helps businesses navigate the complexities of excise tax efficiently. 

Summary

The Executive Regulation of Federal Decree-Law No. 7 of 2017 on Excise Tax outlines key rules for businesses regarding tax payment, stockpiling, and the release of excise goods. Article 11 defines stockpiling and specifies conditions under which excess excise goods are taxed, emphasizing the need for accurate record-keeping. Article 12 details when excise goods are considered released for consumption, including criteria for goods produced within the UAE or leaving Designated Zones. It also addresses how to handle deficiencies and natural shortages. Article 13 explains when excise tax should be added to advertised prices, noting exceptions for certain transactions. Adhering to these regulations ensures compliance and helps avoid unnecessary tax liabilities. 

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.