This article delves into the concept of RSP Registration that companies that are subject to Excise Tax may want to consider while planning their business operations in dealing with excisable goods within the UAE.
Items that fall under the scope of Excise Tax and their tax rates
The above are the tax rates that are applicable for products that fall under the corresponding categories of excisable goods, but what is the percentage is charged on? For that we need to first understand a few key terminologies
- Retail Selling Price (RSP): Is the base price of the product, that is, excluding Excise Tax and Value Added Tax. Alternatively, it is the price at which excise tax for the product is charged.
- Shelf Price: Is the final selling price that the consumer pays in order to purchase the product. In other words, the shelf price is the retail selling price including the Excise Tax and VAT.
Mechanism to determine the RSP of a product
The Retail Selling Price can be arrived at, by deducting the Excise Tax and VAT from the final shelf price.
Eg: The final shelf price of a Sweetened Drink is AED 3.15
- Step 1: Remove 5% VAT element of the final shelf price by dividing the amount by 1.05: AED 3.15 / 100/105 = AED 3
- Step 2: Remove the 50% Excise Tax element* from the figure arrived at in Step 1 to arrive at the RSP = 3 – (3*1/3) = AED 2
Thus AED 2.00 is the RSP of a product with a final shelf price of AED 3.15.
[Note*: For Excise Goods taxable at a rate of 50% of the Excise Price, the Tax shall be equivalent to one third (1/3) of its designated retail sales price. For Excise Goods taxable at a rate of 100% of the Excise Price, the Tax shall be equivalent to half (1/2) of its designated retail sales price.
- In the above scenario, the product under consideration was Sweetened drink, which is taxable at a rate of 50% and thus, AED 3 was reduced by 1/3rd of itself to arrive at the RSP of the product.]
- Alternatively, RSP is the sum total of the costs and profit margins of members within the supply chain of a product.
- Example: If the Cost+Insurance+Freight (CIF) value of an energy drink is AED 5 and the markup of profit by members within the supply chain is 20%, the RSP for the cigarette should be AED 6 (CIF Value) + AED 1( Markup on CIF Value of 20%) Hence RSP is the is the base price at which Excise Tax is charged.
Minimum RSP for Tobacco Products
On 4th August 2019, the FTA released Cabinet Decision No. 55 of 2019 on the Excise Price for Tobacco Products, which sets a minimum excise price (RSP) for Tobacco Products, which is no less than AED 0.4 per cigarette or AED 0.1 per 1 gram of water pipe tobacco, or ready to use tobacco or other similar products
Registering products with FTA
Companies who wish to deal with excisable goods within the UAE, must verify if the products are registered with the FTA under the FTA Excise Goods List.
However if an importer/ producer/ any party within the supply chain wishes to introduce a new product into the UAE market, they must register the product with the FTA through an authorized third party, BrandSync
- The applicant must create a new application under ‘Create New Product’ through their BrandSync account.
- If a company does not have a BrandSync account, they must first register an account with BrandSync.
- The applicant must provide details of the product such as product name, item code, country of manufacturing, product images, HS Code, ingredient list etc.
- The applicant must also list the requested RSP for the product and submit a declaration letter for the same. A template for the letter can be found under the ‘Knowledge Base’ section in the BrandSync portal.
- Once the application is submitted, BrandSync review the application and may request for additional information on the application, satisfying which BrandSync submits the application to FTA for final approval.
- Post approval from FTA, the products can then be viewed under the Excise Goods List in the EMAARATAX portal with details of the product and the RSP.
References
- Cabinet Decision No. 55 of 2019 on the Excise Price for Tobacco Products
- Cabinet Decision No. 52 of 2019 on Excise Goods, Excise Tax Rates and the Methods of Calculating the Excise Price
Summary
Retail Selling Price (RSP) registration for businesses handling excisable goods in the UAE. It details the applicable excise tax rates for various product categories, defines key terms like RSP and Shelf Price, and describes how to determine the RSP from the final shelf price. Additionally, it discusses the FTA’s minimum RSP requirements for tobacco products and provides instructions on how to register products with the FTA via BrandSync, including the necessary steps and documentation.
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.
For understanding more about VAT Updates, Tax Law and Registration reach out to us on: info@acme-group.me | +971527972066.
This article was published on 19 July 2024.
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