Federal Tax Authority has recently clarified the responsibilities of Stockpiler in respect of Excise Tax Law. The stockpiler provision will be applicable from 1st of December 2019 to the following goods:-
1. Sweetened drinks, electronic smoking devices, and tools, or liquids used in such devices.
Where a person expects to hold stock of sweetened drinks, electronic smoking devices, and tools, or liquids used in such devices on 1st December 2019, the person should consider whether he would qualify as a stockpiler or not for Excise Tax purposes.
Conditions for Stockpiler:
- The goods are held in free circulation in the UAE, intended to be sold in the course of business and Excise Tax on those goods has not been previously paid.
- They are ‘excess’ excise goods.
Calculation of Excess Excise Goods:-
Responsibilities of Business:
- Businesses must perform both the above calculation in order to determine Excess Excise goods. If stock held by business on 1st December 2019 is in Excess in both the calculations, the Excise tax shall be due and calculated on the higher ‘excess’.
- This calculation must be performed on an individual product level. If, there are ‘excess’ excise goods of any product, on 1st December 2019, then the person will be considered to be a stockpiler and will be required to be registered.
- Businesses which qualify for stockpiler should register for Excise Tax Purpose with effect from 1st December 2019, and to pay Excise Tax on the excess stock in hand on 1st December 2019.
- A person, in the course of conducting business, is required to keep audited records, showing the quantity of his stock of excise goods for the 12-months prior to 1 December 2019 for the purposes of ascertaining the stock of excise goods, regardless of whether the stock is considered ‘normal’ or ‘excess’.
2. Tobacco products
FTA has clarified that where a person hold any Tobacco product on 1st December 2019 on which excise tax has already been paid on a price below the minimum excise price as mentioned by Cabinet Decision No. 55 of 2019 on the ‘Excise Price for Tobacco Products’. The decision stipulates that excise price cannot be set under Dh0.4 (40 fills) for one cigarette. Where a person does meet the provisions to be classified as a stockpiler by ascertaining the above calculation, they will again have Excise Tax obligations and registration obligations, where not already registered.
How can MB Group help?
We have a dedicated team of Excise Tax specialists to help you in the smooth implementation of applicable Excise Law w.r.t. new Excisable Product in the following ways:
- Services related to Stockpiling
- Physical Verification of Excisable Stock
- Issuance of Audit Report for stockpiler
- Identification of Products on which Excise Tax will be applicable
- Impact assessment of Excise Tax on Cashflow, Price & Profitability of the company
- Registration of Excise Tax & Warehouse Keeper Registration
- Excise Tax advisory
Last Updated: 7th November 2019
This article is contributed by:
Tag: Excise Tax, Excise Tax in UAE, Stockpiler