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Key UAE Tax Changes: Amendments to the UAE Excise Tax Executive Regulation

November 23, 2023

On August 17, 2017, the Federal Decree-Law No. 7 of 2017 on Excise Tax (“Excise Tax Decree-Law”) was issued, followed by Cabinet Decision No. 37 of 2017 on the Executive Regulation of the Federal Decree-Law No. 7 of 2017 on Excise Tax (“Excise Tax Executive Regulation”) on September 24, 2017, both with effect from 1 October 2017. 

On September 26, 2022, the Excise Tax Decree-Law was amended for the first time, with the amendments going into effect as of October 14, 2022. In total, eight articles have been amended in the Excise Tax Decree-Law, and a new article was introduced on the Statue of Limitation. 

However, the Excise Tax Executive Regulation remained unchanged until November 6, 2023, where the UAE’s Cabinet of Ministers issued Cabinet Decision No. 108 of 2023 on Amending Some Provisions of the Excise Tax Executive Regulation (“Amended Executive Regulation”). Most of the provisions of the amended Executive Regulation will be effective starting December 1, 2023.

This article seeks to elucidate the key amendments introduced in the Amended Executive Regulation, aiming to equip taxpayers for upcoming shifts, fulfill new tax commitments, and capitalize on the benefits offered by the revised regulations.

Key Highlights and Amendments in the UAE’s Amended Excise Tax Executive Regulation

  • Article 1 of the Amended Executive Regulation omits many previous definitions, instead referring readers to the Excise Tax Decree-Law, making the legislative environment simpler and more consistent.
  • Three new terms were introduced in Article 1 on the ‘Definitions’, which are “official evidence”, “commercial evidence”, and “shipping certificate”.
  • Ceasing to conduct activities that trigger an Excise Tax liability result in the taxable person being considered as non-liable for Excise Tax as of the date following the expiry of (6) six months from the date it ceases to conduct such activities, unless it is proven that it has the intention to resume conducting such activities in the coming (6) six months.
  • The FTA may now forcefully deregister an Excise Tax taxable person in specified cases.
  • Failure to keep audited reports in respect of stockpiled Excise Goods can lead to the FTA considering the whole inventory of Excise Goods as “excess” with Excise Tax becoming due in full.
  • Excise Goods are no longer considered ‘released for consumption’ where there is a natural shortage in the quantity of Excise Goods, subject to meeting the specified requirements.
  • Relaxed evidentiary requirements for the purposes of exempting an export of Excise Goods from Excise Tax compared to the former evidentiary requirements where taxable persons could not benefit from export exemptions without obtaining and retaining an Exit Certificate.
  • Excise Tax Designated Zones that fail to continue to comply with the conditions and requirements will be treated as normal lands forming part of the UAE mainland.
  • Deductible Excise Tax for exported Excise Goods is now subject to similar evidentiary requirements as applicable to exempting exported Excise Goods.
  • Two instances are introduced for the purposes of deductible Excise Tax on exported Excise Goods, during which a taxable person for Excise Tax purposes is treated as if it had settled the due Excise Tax.
  • Persons that are not taxable persons for Excise Tax purposes but who are exporting Excise Goods to outside the UAE may request a refund of the previously paid Excise Tax on such goods subject to compliance with the evidentiary requirements, effective from June 1, 2024.

A full version of the Amended Executive Regulation can be accessed here.

Conclusion

With such a rapidly evolving and developing tax legislative environment and constant developments, especially taking into consideration the complexities arising from such rapid development such as the extent and applicability of transitional rules, as well as measures that need to be urgently adopted by taxpayers to ensure tax compliance, it is crucial to stay up to date with all new developments and consider seeking professional advice.

While understanding and complying with the tax laws may be complex, doing so is critical for maintaining the financial health and reputation of businesses, as well as the economic stability of the UAE. If you are unsure about your obligations, it is recommended to seek advice from a legal/tax professional.

This Article is prepared by Mohamed El Baghdady, Head of Tax and Financial Crimes, and Marwan Alnooryani, Senior Tax Associate, at Habib Al Mulla & Partners Law Firm.

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Our expertise in tax law and regulations allows us to provide clients with effective and accurate tax advice, taking into consideration their unique circumstances and needs. Additionally, our experience and knowledge in handling tax disputes enable us to represent clients in discussions with tax authorities, as well as in court proceedings. 

Our track record of successfully resolving tax disputes and helping clients minimize their tax liabilities has likely earned us a reputation as a trusted and reliable tax advisor. Our tax and financial crimes team, led by our Head of Tax and Financial Crimes, Mohamed El Baghdady, has successfully advised and represented clients across various industries, including, but not limited to, consumer goods and retail, services, real estate, oil & gas and banking and finance, before the government authorities, tax tribunals and courts. Our clients have been successful in multiple tax disputes before the committees and courts.For further information, please contact, Mohamed El Baghdady, Head of Tax and Financial Crimes, on mohamed.elbaghdady@habibalmulla.com or any of the members of our team.

Mohamed El Khatib

Principal Partner – Head of Disputes

mohamed.elKhatib@habibalmulla.com

Mohamed ElBaghdady

Senior Associate
mohamed.elbaghdady@habibalmulla.com

Marwan Alnooryani

Senior Associate
marwan.alnooryani@habibalmulla.com

Basem Ehab

Associate
basem.ehab@habibalmulla.com

Kholoud Hafez

Associate
kholoud.hafez@habibalmulla.com

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