Excise Tax Penalty Reconsideration

In the United Arab Emirates, excise duty is levied only on certain goods that are manufactured, imported, and stored. The Federal Tax Authority supervises the application of excise duty on the basis of the current tax procedure law.  Taxpayers who do not comply with the UAE excise duty laws and regulations are penalized. However, the FTA provides for the possibility to apply for a review of the excise duty penalty if the taxpayer is not satisfied with the authority’s decision. This is a complex process, so our tax experts in Dubai can guide you through the review procedure in accordance with the FTA guidelines.

Also, Check: Excise Stock Audit

Importance of excise duty in the Emirates

Excise duty is compulsory in all Emirates of the UAE as it aims to reduce the harmful effects of certain excisable goods. An organization that sells carbonated beverages, alcohol, e-cigarettes, petroleum products, etc. must implement excise duty in order to properly market excisable goods. This will also reduce the likelihood of the entities being subject to FTA administrative penalties.

The UAE regulatory authorities can assess the excise duty records of registered companies. If a company has not complied with FTA requirements within the time limits and has underpaid excise duties, the authorities may impose heavy fines. Therefore, every taxable company in the UAE pays attention to excise duty.

Excise duty penalties in the UAE

Under Federal Decree-Law No. (7) Of 2017 on Excise Duty, the FTA imposes administrative penalties on taxpayers for violations of tax laws and regulations. Regulatory penalties may result from the following scenarios:

• If the taxpayer does not indicate the prices that include the tax, an administrative penalty of AED 15 000 is imposed.
• If the taxpayer fails to comply with the conditions related to the movement of excise goods from one designated zone to another and fails to comply with the legal procedures for the production and storage of excise goods. A fine of AED (50 000) or more is imposed. (50% of the tax, if any, applicable to the goods as a result of the offense).
• If the Taxable Person fails to submit price lists to the FTA for the excise goods manufactured, imported, or stockpiled therein. The fine is AED 5,000 the first time and AED 20,000 in case of repeated acts.
• If you fail to register as an excise taxpayer within the prescribed time limit, you will be fined AED 20 000.

How can you solve the problem of non-compliance with excise duty requirements?

In case of non-compliance with the excise duty, the taxpayer may review the decision of the authority in accordance with Federal Decree-Law No. 7. A person may waive the non-compliance penalty by submitting a UAE excise duty review form to the FTA, if applicable, however, comprehensive knowledge of the tax laws and experience in this procedure is required. Our tax advisors can resolve all your UAE excise tax difficulties in accordance with the regulatory requirements.

The UAE Excise Penalty Review Form is only available on the official website of the Federal Tax Authority. The applicant has to log in to his e-service account using the registered email address and password. The form consists of pre-populated fields requiring updated and correct information along with supporting documents. The applicant is required to provide the authorities with an explanation for the non-reconciliation of the excise duty penalty (why you are not satisfied with the FTA’s decision). Also, communicate alternative actions that should be taken in your case. One of the most important things is that the application and all evidence must be in Arabic and not in English, in accordance with the FTA guidelines. You can outsource to tax experts in Dubai who help national or international clients deal with administrative penalties with the least likelihood of error.

Also, Check: Excise Tax Compliance

Requirements for an application for review

The following documents and information are required to submit a UAE excise duty review form:

• Copy of the passport of the authorized signatory
• Emirati identity card of the authorized signatory
• Power of Attorney (POA) or Memorandum of Association (MOA).
• An official letter with legal references

How does the FTA reduce fines for tax infringements?

The Federal Tax Authority strives to create a safe and friendly business environment for UAE residents and foreigners. The FTA does not necessarily impose penalties for non-compliance, but also offers additional ways for businesses to avoid them. As mentioned above, applying for an excise duty penalty review helps a number of taxpayers to reduce their penalties. However, the FTA recently announced a major relief for taxpayers – a review of administrative penalties in the UAE to reduce the penalties imposed on them. Under this recently amended provision, taxpayers whose outstanding penalties were not paid by 31 December 2021 could have them reassessed by 31 December 2022.

Get help reviewing excise duties

Over the years, Bestax chartered accountants and tax advisors have helped individuals and businesses comply with tax law. We are a team of leading accounting and advisory firms in the heart of the UAE, Dubai. Our dedicated tax consultants assist clients in excise registration/registration, excise returns filing, excise refunds, excise enforcement, and excise compliance services across the Emirates. We guarantee that regulatory authorities will not penalize your company if you hire us to manage your excise duties in the UAE.

In case of a previous FTA penalty, you can hire our excise consultants who provide complete guidance on how to submit an excise penalty review form in the UAE in accordance with regulatory guidelines. Non-compliance is our main concern, as well as ensuring that our clients are always protected from potential risks. Contact us today!