Excise Tax Refund

For companies operating in the UAE, it is always important to comply with the country’s tax laws. In the UAE, there are two main types of taxes that must be collected to comply with the requirements of the federal tax authority. The first is VAT, a value-added tax applied at every stage of the supply chain, while excise duties are only levied during the production and importation of goods. If a company deals in excisable goods, it must effectively manage the filing of the excise tax return as well as the reimbursement of excise tax in the UAE upon registration. Here we will look in detail at the process of obtaining an excise duty refund from the UAE regulatory authorities.

What is an excise duty refund?

An excise duty drawback applies when the excise duty to be deducted is higher than the excise duty payable as declared. The Federal Tax Authority is responsible for refunding the amount of overpaid tax in accordance with the provisions of the Excise Duty Law. A registered economic operator may claim a refund of excise duty by submitting an application to the FTA.

Also, Check: Excise Tax Deregistration

Reason for claiming a refund

The main reason for a refund of excise duty is to provide financial relief to manufacturers, importers, and warehouse keepers. They can use the excess refundable tax to deduct from their excise duty liability payable to the FTA in subsequent tax periods until the excess refundable tax is utilized. The request is necessary to obtain the excess refundable tax and to balance the tax assessments. This has a full impact on your company’s revenue and growth in the years to come.

When to claim a refund of excise duty from the FTA?

According to the Federal Law No. (7) Of 2017 on Tax Procedures, registered companies can claim a refund of excise duty from the FTA if the following conditions are met:

• If excise duty was previously paid on an excisable good that has also been transformed into another new excisable good and excise duty is again payable on it. For example, excise duty is payable on both raw tobacco and cigarettes made from tobacco.
• If the excisable good is already taxed in the UAE and exported outside the country.

Excise duty refund periods

The time taken to check and accept an excise duty drawback claim is usually time-consuming, as excise goods are subject to high charges. The FTA will refund the excess refundable tax to the taxpayer within almost 2 calendar months of the request. The FTA also has the right to carry out a tax audit to check your case within 21 calendar days. In certain situations, the FTA may refund an overpayment of refundable tax in less than two tax periods. The first of these is when the excise duty registration is canceled. The second is where the FTA is satisfied that the taxpayer is likely to carry out taxable activities in the future, but there is a likelihood that a refundable overpayment will have accumulated for at least one year.

How can I claim a refund of excise duty in the UAE?

Refunds of excise duty in the UAE are made online via the FTA’s official website. Let’s take a look at some of the important steps to claim an excise duty refund:

Step 1: Log in to your FTA portal

First, the applicant must log in to the FTA e-services portal using the registered email address and password. Once this is done, he/she has to click on the “Excise Duty” tab.

Step 2: Access the refund form

To access the Repayment Form, the applicant or representative clicks on the ‘Excise Declarations and Repayment of Excise Duty’ tab. Then scroll down and open the form “EX301 – Excise duty refund”.

Step 3: Add information in the fields

Here begins the real process of filling in all the mandatory fields and attaching the necessary documents. Once you have completed the form, click on the “Save and Review” button and confirm the details.

Step 4: Submit the application

It is important to review all information before submitting your application. If the information you have entered is accurate, click the “Submit” button. Your request is now forwarded to the federal authority.

Step 5: Check your balance

After you receive the email confirming your refund, you can access the “My Payment” section under “Transaction History” to view your balance.

However, this process is not as simple as it seems. Applicants are required to submit their refund applications in a timely and accurate manner. Businesses can be penalized for late or incorrect submission of tax refund claims.

How do taxpayers get difficulties obtaining FTA refunds?

Taxpayers often get confused when paying their taxes and end up paying more than they are supposed to. They do not understand the FTA rules and the complex tax regimes in the UAE. As a result, companies face compliance problems and heavy fines and penalties from the authorities. For the taxpayer, the process is time-consuming and complicated. Taxpayers are advised to outsource to professional tax advisors in Dubai who will prevent your accounting from FTA penalties.

What does BestaxCA do for you?

BestaxCA’s tax experts can help you at every stage of the excise duty reimbursement process under the 2017 Decree Law. Our tax advisors will conduct an in-depth analysis of your business and financial transactions. We will calculate the amount of tax you have overpaid before submitting your application to the FTA to avoid unnecessary mistakes. Our team will check and prepare all the information and documents you request. We have extensive knowledge of UAE tax laws to provide an expert opinion on excise duty refunds in the UAE. We handle all follow-up questions and we are with you until you receive your excise duty refund. Don’t hesitate to contact us!