An Overview of Excise Tax in UAE

Excise tax is the kind of tax is an indirect tax that usually charged on the sales of a particular commodity. This kind of tax is not directly paid by the actual user of an item; rather it is levied on the manufacturer or merchant of a particular product by the Internal Revenue Service. Most of the merchants of a consumer product ultimately pass on this tax on the target customers by including it into the actual price of the products sold by them. The following are some of the most important details about this kind of Tax in UAE:-

How to register:-

A business can register for the Excise Tax in UAE by visiting the E-service section of the FTA website. First of all, it needs to sign up and create an account. You case find more details about the Excise tax registration by going through the Excise tax registration user guide.

Goods included in this tax:-

In UAE excise tax is applicable on all kinds of excise goods that can be discussed as follows:-

Carbonated drinks:-

These include all kinds of aerated beverages except the unflavored aerated water. It is also levied on carbonated drinks such as concentrates, powder, gel or extracts that are intended to be transformed in an aerated beverage.

Energy Drinks:-

Energy drinks include all the beverages that are rich in stimulating substances and aim to improve the mental as well as physical stimulation of a human being. Caffeine, Taurine and Guarana are of the most prominent ingredients of these beverages. These drinks consist of all the substances that have the same effect as the above-mentioned substances. Some concentrates, powders, gels or extracts are also included in this category.

Tobacco and its by-products:-

This tax is levied on most of the substances list in the schedule 24 of the GCC Common Customs Tariff include Tobacco and it’s by-products that are extremely injurious to the human health.

The main purpose of this tax:-

The government of UAE is considered to levy the excise tax with an aim to bring down the consumption of unhealthy as well as harmful commodities by the locals, besides increasing the revenue from these items that can be finally used for the overall welfare of the general public.

The rate of excise tax:-

The rate of excise on some of the health hazardous items include as follows:-

50 percent of the actual price in case of Aerated drinks.

100 percent of the actual price in case of tobacco and energy drinks.

The above mentioned are some of the most prominent details about the Excise tax in UAE. You can find some more details in this regard on the internet.

Know all about VAT in UAE

Value added tax can be defined as a kind of indirect tax that is being levied domestic consumption of goods for services, excluding the items that are rated zero by the government such as food, medicines and other substances that are exempted from all kinds of duties. In this article, we are going to discuss some of the most important facts about its introduction in UAE:-

Introduction of VAT in UAE:-

The UAE government is all set to levy VAT from January 2018 and initially the rate is expected to be somewhere around 5%. The money received through this method of taxation would be treated as a new source of income for the government that would, in turn, serve the local people with a high-quality public service. Moreover, it would also reduce the dependence of the government on oil as well as other hydrocarbons as the main source of revenue. There are many Tax Agents in UAE who can provide you all possible help in regards to VAT Filling in the local area.

Implementation of VAT:-

It is assumed that VAT in UAE would be applicable on most of the transactions and services available in the local area with a limited number of assumptions. This tax is expected to marginally increase the overall cost of living, but it would definitely vary from person to person on then lifestyle as well as spending habit. A person who focuses on investing in the goods and services that are exempted from all kinds of taxes is likely to see hardly any increase in his cost of living. The national government is planning to introduce a set of rules according to which all the businesses must be very clear about the amount of VAT an individual needs to pay for each transaction done by him. His decision about whether or not to buy a product or service must be solely based on this data.

Method of VAT Registration:-

The businesses of all sizes in UAE can switch to VAT Registration by visiting the e-services section on the FTA website. First of all, they need to create an account. For more detailed information in regards to tax registration, they need to refer to the VAT Registration User Guide.

Process of implementation of VAT on businesses:-

The businesses of all sizes would be solely responsible for careful documentation of their total income, costs and other charges associated with VAT that applies to them. Businesses that qualify the minimum annual turnaround requirement will have to register for VAT. Those who think that they should be exempted from registering for it must maintain a well defined financial record for the ministry to decide whether they must register for this tax or not.

The business and traders that are registered need to charge VAT on all their customers on the basis on the prevailing rate and incur Vat on goods/ services that they purchase directly from the suppliers or service provider. The variation between these amounts is either reclaimed or paid to the government.

The registered businesses are required to charge VAT on all the products or services provided by them. They have the opportunity to reclaim the amount of VAT that they have paid for business-related goods or services. They need to keep a well-maintained record of all their dealings as a probe that they have paid this tax correctly.

Not only this, these businesses also need to clearly mention the amount of VAT that they have charged from their customers and also the amount that they have paid to the government in the form of tax on a daily basis. Initially, it would be a formal submission and the reporting would be usually online.

If they have charged more VAT than they have paid, they have to pay the difference to the government. If they have paid more VAT than they have charged, they can reclaim the difference.

VAT in GCC:-

The government of UAE is planning to implement the entire taxation system in coordination with other GCC countries as it is closely connected with them and the GCC Customs Union through an economic agreement. The GCC has played an active role in the proper planning as well as the implementation of the new public policy as it was of the view that such collaborative approaches would ultimately lead to the development of the entire region as a whole.

Impact of VAT on business:-

It is obvious that the introduction of this kind of tax has impacted the business at least to some extent if not much. In this part of the article we are going to discuss some of the ways in which it has impacted:-

If a business paid 5% VAT or have indulged in dealing with any kind of Zero-rate transaction, then it would be eligible to take the facility of the VAT recovery policy. A special set of rules would be planed to effectively govern the entire process VAT Filling in UAE. These rules would usually cover the legal aspects related to free zones, relieve from bad debt, Real estate, VAT group, Insurance, Islamic finance as well as import of good. They would also include a few clauses related VAT refund. All the businesses strictly follow the transitional period as well as rules related to VAT Filling in Manama, Bahrain.

To conclude we can say that the above mentioned are some of the most prominent facts the VAT in UAE. You can find more details in this regard on the internet.

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