Excise Registration Process in the UAE

Excise Registration Process in the UAE

The United Arab Emirates (UAE) introduced Excise Tax in 2017 under the Federal Tax Authority (FTA) to reduce the consumption of harmful products and protect public health. Excise Tax applies to goods such as tobacco products, energy drinks, carbonated drinks, sweetened beverages, and electronic smoking devices. Any business that imports, produces, or stores these goods must register with the FTA for Excise Tax. Failure to register leads to penalties and non-compliance. This blog explains the excise registration process, who needs to register, and how businesses can stay compliant.

What is Excise Tax in the UAE

Excise Tax in the United Arab Emirates (UAE) is an indirect form of tax on goods that will harm human health or the environment. It was introduced in 2017 by the Federal Tax Authority as part of a plan to lower the use of harmful items and promote healthier living. The tax is an extra cost on a supply of goods before they reach the consumer. The scope and rates are:

• 100 percent on a supply of tobacco products and electronic smoking devices

• 100 percent on a supply of energy drinks

• 50 percent on a supply of carbonated drinks and sweetened beverages

• Any business that produces, imports, or stores these goods will need Excise Tax registration before trading

Who Must Register for Excise Tax

Registration is mandatory for any business that imports, produces, or stocks excisable goods in the UAE. The Federal Tax Authority requires all entities involved in the supply of such goods to register before trading. The scope of registration covers:

• Local manufacturers of excisable goods

• Importers that bring excisable goods into the UAE

• Warehouse keepers who store excisable goods for other businesses

Examples of Registration Cases

• A company that imports a supply of energy drinks will need registration

• A manufacturer of carbonated beverages in the UAE will need registration

• A warehouse operator storing excisable goods for clients will need registration

• Retailers that purchase from registered suppliers usually do not need registration unless they hold large stock

Step-by-Step Process of Excise Registration

The Federal Tax Authority (FTA) manages Excise registration fully online through its e-Services portal. Every business that produces, imports, or stocks excisable goods will have to follow the process to obtain a Tax Registration Number. The main steps of registration are:

1. Create an e-Services account on the FTA portal

2. Log in and select the option of Excise Tax registration

3. Provide details of the business including trade license, legal form, and contact details

4. Describe the nature of activities that involve excisable goods

5. Upload copies of required documents such as trade license, certificate of incorporation, and customs details

6. Submit the completed application for review. Once approved the FTA will issue a Tax Registration Number for Excise Tax

Excise Returns and Compliance

Once a business completes registration it will need to file an excise tax return every month. The return is submitted through the portal of the Federal Tax Authority and it covers the quantity of excisable goods that were produced, imported, or released from a designated zone during the period.

For example, if a company imports two thousand boxes of carbonated drinks in August it will declare that amount in its August return and pay tax based on the applicable rate. The payment of tax must match the declared liability in the return.

Any delay in filing, incorrect reporting, or unpaid liability will result in penalties. A business must keep proper records of excisable goods for audits and inspections.

Designated Zones in Excise Tax

A designated zone in the UAE is an area such as a bonded warehouse or a free zone that is approved by the Federal Tax Authority. Goods placed in a designated zone will not be subject to excise tax immediately which gives businesses more control on cash flow.

Tax becomes due when excisable goods leave a designated zone for consumption in the UAE market. For example, when a warehouse keeper stores energy drinks in a designated zone no tax is charged. Once those goods are released into the local market the excise tax will apply.

Any business that operates in a designated zone must register for excise tax and follow all compliance rules set by the authority.

Penalties for Non-Compliance

The Federal Tax Authority will impose strict penalties on any business that fails to meet a supply of excise tax obligations. Non-compliance will include a late registration, a late filing of returns, or a failure to pay the due tax amount on time and may lead to additional fines or legal action. Each violation is treated seriously and results in financial consequences.

Operating without excise registration can attract a penalty that starts from AED 20,000. In addition to fines, the authority may take action on excisable goods. A business that trades or stores such goods without proper registration will face severe penalties.

The rules of compliance show that timely registration and accurate reporting are essential. Businesses must maintain records, pay liabilities on time, and complete filing to avoid penalties and inspections from the authority.

Benefits of Excise Registration

Excise registration in the UAE provides multiple benefits for businesses that deal with excisable goods. The main benefits are:

• A business will operate legally under the rules of the Federal Tax Authority

• Compliance builds confidence of suppliers, distributors, and customers in the business

• Registration protects a business from penalties on late filing or unregistered trading

• It ensures proper maintenance of records and transparency in all transactions

• Excise registration supports smoother audits and inspections from the authority

• For companies that plan expansion in the UAE market, registration is a mandatory step that proves compliance and responsibility

• Being registered shows commitment of a business to national tax rules and market standards

Conclusion

 Excise Tax in the UAE applies on a supply of goods that are harmful to health or the environment such as tobacco products, sweetened beverages and energy drinks. Any business that imports, produces or stores these goods will register with the Federal Tax Authority and submit a monthly return on the portal. Failure to follow a supply of excise rules will result in penalties that include fines and the possible seizure of excisable goods. Early registration and keeping all obligations on the portal up to date will allow a business to operate legally, manage all tax responsibilities and maintain accurate records.

FAQs

1. Who needs to register for Excise Tax in the UAE?
    Any business that imports, produces, or stores a supply of excisable goods will need to register with the Federal Tax Authority.

2. What goods are subject to Excise Tax in the UAE?
    The scope of excise tax covers tobacco products, electronic smoking devices, energy drinks, carbonated drinks, and sweetened beverages.

3. How often must excise returns be filed?
    A business will file excise tax returns every month on the Federal Tax Authority portal.

4. What is a designated zone in Excise Tax?
    A designated zone is a warehouse or a free zone where excisable goods can be stored without tax until released into the UAE market.

5. What are the penalties for not registering for Excise Tax?
    A penalty will start from AED 20,000 for failure of registration and can include seizure of excisable goods.