If you are a manufacturer / importer / warehouse keeper of excise goods, MBG Corporate Services can help mitigate risks and identify opportunities
The introduction of excise tax has impacted several aspects of the business including cash flow, profitability, pricing, regulatory compliance, invoicing, documentation, records, IT systems, contract terms, and product demand. It is therefore important for companies to consider aspects such as the timely registration of products with the Federal Tax Authority (FTA), the determination of the taxability of products, the assessment of the areas and the extent of the effects, the filing of declarations, the decision on the conversion of a Warehouse in a zone subject to excise duty, representations vis-à-vis the authorities when checking by the FTA etc.
Under the rules, companies have the option to defer excise duty when goods are brought into an approved excise zone (i.e. goods are not released for consumption within the UAE). Aside from the postponement of excise duty, storage in the excise zone is relevant for companies exporting excise goods. Companies that do not store the goods in the excise zone must pay the excise duty and later request a refund for exports. This leads to a blocking of cash.
In order to postpone the excise duty, the existing warehouse must be converted into an excise duty zone. This would mean that companies would not have to change the location of their operations or warehouse. You only need to apply for a designated zone and a warehouse keeper registration for the conversion of an existing warehouse into a designated excise tax zone if the conditions set by the FTA are met.
Being aware of the pitfalls of working in a controlled environment with tight scrutiny of excise returns and ensuring that staff are up to date with changes in practice and legislation cannot be overstated. These measures help to reduce the risk of errors in the process of complying with excise duties.
Given the complexity of the excise process, taxpayers are likely to discover mistakes at some point, the smallest of which can have serious consequences. The key to mitigating sanctions, which can include interest, penalties, and / or law enforcement, is to be efficient, take timely action, and ensure full disclosure and cooperation in regulating matters.
Given the above reasons, companies are well advised to outsource their excise duty compliance to FTA-approved registered tax advisors who will ensure proper operation and compliance with all obligations. MBG Corporate Services tax advisors have extensive experience in excise compliance auditing and excise health auditing, which enables us to identify potential risks and mitigate those risks, while also identifying opportunities to improve processes or obtain additional refunds from the FHA. Our worldwide experienced team checks the accuracy of your data and ensures compliance with excise tax regulations and guidelines. Our comprehensive excise tax health checks ensure that you are optimally prepared for excise tax audits.
Email: uae@mbgcorp.com
WhatsApp / phone:
+971 52 6406240
Website: www.mbgcorp.com/ae
Vipin Kumar Ahuja is Director – Taxation at MBG Corporate Services