Understanding Tax Refunds in Special Cases Under the Executive Regulation.

The Executive Regulation of the Federal Decree-Law No. 7 of 2017 on Excise Tax outlines various provisions for tax refunds in special cases, particularly under Cabinet Decision No. 108 of 2023. This article aims to provide a comprehensive overview of Article 22, which delineates the conditions under which tax refunds can be claimed by foreign governments, international organizations, and businesses operating within the framework of excise tax in the UAE.

Key Provisions of Article 22

1. Tax Refunds for Foreign Governments and International Organizations

Under Article 22, a refund of excise tax paid can be claimed by foreign governments, international organizations, and diplomatic missions, provided they meet specific conditions:

• Official Use: The excise goods must be acquired exclusively for official purposes.
• Reciprocity of Tax Treatment: The country where the foreign entity is established must not impose similar excise tax burdens on entities from the UAE. Alternatively, the refund process should align with any international treaties or agreements that govern tax liabilities for these entities.
• Non-Commercial Use: The goods should not be acquired for resale or any commercial activities.

These conditions ensure that the refund process is equitable and reflects mutual agreements on tax exemptions.

2. Tax Refunds for Registered Persons in Implementing States

For individuals or entities registered in an implementing state, claiming a refund of tax incurred in the UAE involves several criteria:

• Registration Status: The claimant must not be registered in the UAE.
• Taxable Status: Evidence must confirm that the claimant is a taxable person in another implementing state.
• Proof of Payment: Documentation confirming tax payment in the UAE is necessary, including details on the tax amount.
• Export Evidence: Clear proof that the excise goods were exported to another implementing state is required, along with confirmation of tax payment in that state.

This framework allows for the smooth transfer of goods across borders while ensuring compliance with tax regulations.

3. Refunds for Non-Taxable Persons Directly Exporting Goods

Non-taxable persons conducting business who directly export excise goods can also apply for refunds, subject to the following conditions:

• Physical Export: Goods must be physically exported outside the UAE.
• Tax Payment Evidence: The claimant must submit evidence proving tax payment in the UAE, detailing the amount paid.
• Export Documentation: Retaining either a customs declaration and commercial evidence or a shipping certificate with official evidence is crucial.
• Condition of Goods: The excise goods should remain unused or unaltered between supply and export, except for necessary preparations for export.

These requirements safeguard against misuse of tax refund claims and ensure the integrity of the excise tax system.

4. Indirect Exports and Associated Refunds

For non-taxable persons who indirectly export goods through an overseas customer, the refund application process involves:

• Customer’s Role: The overseas customer must physically export the goods.
• Proof of Tax Payment: Similar to direct exporters, proof of tax payment in the UAE is essential.
• Documentation from Customer: The supplier must obtain and retain the required export documentation from the overseas customer.
• Condition of Goods: Like direct exports, the goods must not be altered during the period between supply and export.

This section reinforces accountability in the supply chain and ensures compliance with tax regulations.

5. Authority’s Discretion and Customs Verification

The tax authority has the discretion to reject claims based on insufficient documentation or evidence of the goods’ exit from the UAE. Customs departments play a critical role in verifying the type and quantity of exported excise goods, aligning their assessments with established customs procedures and the tax risk matrix.

6. Claim Submission and Approval Process

Refund claims must adhere to specific guidelines outlined in Article 21 of the Decree-Law:

• Documentation: Claims must include all required information and be submitted through prescribed channels.
• Minimum Claim Period: Claims should relate to a minimum period of one month.
• Goods Valuation: The value of the goods must meet or exceed the threshold established by the Minister.

Once a claim is submitted, the tax authority is obligated to issue a decision on its approval or rejection within 20 business days.

Conclusion

The provisions set forth in Article 22 of the Executive Regulation of the Federal Decree-Law No. 7 of 2017 on Excise Tax provide a clear framework for tax refunds in special cases. By establishing specific conditions for various entities, including foreign governments and international organizations, as well as businesses, the UAE aims to create a fair and efficient tax environment. Understanding these regulations is essential for all stakeholders involved in the excise tax landscape, ensuring compliance and facilitating international trade.

summary

Article 22 of the Executive Regulation of the Federal Decree-Law No. 7 of 2017 on Excise Tax, outlined in Cabinet Decision No. 108 of 2023, specifies conditions for tax refunds in special cases. Foreign governments, international organizations, and diplomatic missions can claim refunds if the excise goods are for official use, with no similar tax burdens in their home countries, and not for resale. Registered persons from implementing states can also request refunds if they provide proof of taxable status and tax payment in both the UAE and the destination state. Non-taxable persons may claim refunds for directly or indirectly exported goods, provided they meet strict documentation and usage conditions. The tax authority has discretion over the acceptance of claims and must decide within 20 business days. This framework ensures compliance and facilitates international trade while maintaining the integrity of the excise tax system.

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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