The Federal Tax Authority (FTA) has revealed that compliance with Tax Returns requirements for Excise Tax one year after its introduction in the UAE has amounted to 97.7% of registered businesses – one of the highest rates in the world – while the total number of registrants reached 715 registrants.
His Excellency Khalid Ali Al Bustani, Director General of the FTA, said: “All indexes confirm that the implementation of Excise Tax in the UAE has been remarkably successful at all levels, thanks to the Authority’s state-of-the-art electronic systems, characterised by their simplicity and ease of use, as well as to the tremendous cooperation and compliance on the part of businesses in the UAE.”
“These positive outcomes clearly indicate that we have begun achieving the main objectives of introducing Excise Tax, most notable of which is building a safe and healthy society by reducing the consumption of goods that harm the health of community members and affect the quality of the environment. The tax system has also helped increase financial resources to support the expansion of government services provided to the public,” H.E. added.
The news came in a press statement issued today by the FTA, as it collected the 12th instalment of Excise Tax (covering September 2018), the deadline for which was set for October 15. Excise Tax in the UAE came into effect on October 1, 2017, where a 50% tax was applied to soft drinks and 100% tax applied to tobacco products and energy drinks.
His Excellency stressed that the positive results during the first year of the introduction of Excise Tax were achieved under the guidance of the wise leadership, which is striving to make the UAE one of the most advanced and innovative countries in the world by 2021.
H.E. Al Bustani continued: “The implementation of Excise Tax has been well received by all concerned institutions at the local, regional and international levels. The most recent report from the World Health Organisation’s Regional Office for the Eastern Mediterranean, for example, praised the UAE’s anti-smoking efforts through its imposition of tax on tobacco products. The statistics indicate that the value of the country’s foreign trade of tobacco and its products decreased significantly over the course of this year – a testament to the success of the UAE’s policies to reduce the consumption of goods that adversely affect human health and the environment.”
His Excellency attributed the high rate of commitment to Excise Tax Return submissions to the ease of the procedure provided by the Authority to provide returns, where Returns can be submitted and due taxes settled on a 24-hour basis and from any location through the FTA official website: www.tax.gov.ae, which has been designed in accordance with international best practices. H.E. reiterated that the portal provides flexible payment mechanisms and detailed information and guidance to enhance tax awareness and help businesses achieve self-compliance.
“The Federal Tax Authority has launched more than 60 guides covering all legislative and executive aspects of UAE tax regulations. It has also launched three e-learning programmes and 22 infographics in its effort to promote the highest standards of transparency and accuracy in the implementation of tax procedures. This information covers various aspects of taxation and includes more than 12 guides on Excise Tax, such as the disclosure of imports, the authorisation and registration of imports, recovering Excise Tax, submitting Tax Returns, and settling due taxes, as well as information regarding warehouse keepers, designated zones, and other related topics,” H.E. explained.
His Excellency called on businesses to make use of the manuals and study them extensively to familiarise workers in these sectors with the UAE tax system, its legislation and mechanisms.
“The various partnerships that the FTA has established with all concerned authorities in government and private sectors have played a key role in successfully implementing the tax system, achieving several important objectives that include raising tax awareness among business and consumer sectors,” H.E. added. “The FTA organises seminars and workshops for businesses around the UAE to answer their queries in this regard, in addition to arranging joint inspection campaigns with the Departments of Economic Development and Municipalities, to alert non-complying businesses to remedy their situation.”
H.E. Al Bustani expected that the forthcoming Tax Period will witness more positive results as several new regulatory mechanisms and systems are due to be implemented. Significant among these is the Digital Tax Stamp Scheme for Tobacco Products, which will come into effect at the beginning of 2019. The scheme will establish a comprehensive tracking framework to support the Authority’s efforts in collecting taxes, combating tax evasion, and upholding the rights and duties of Taxable Persons in the UAE.
H.E. went on to stress the importance of tobacco companies’ compliance with the new Scheme to avoid penalties and being banned from practicing their business until such compliance is achieved. H.E. Al Bustani noted that Cabinet Decision No. (42) of 2018 On Marking Tobacco and Tobacco Products aims to strengthen the UAE’s tax system and that the UAE is the first country in the region to apply a digital tracking system for tobacco-labelling. His Excellency explained that the system is an innovative solution to deter tax evasion, facilitate inspections at customs points and in markets, and prevent the selling of non-taxed tobacco products. He revealed that the system will work by means of a stamp or digital seal that will be installed on tobacco product packaging, which will be registered in the Authority’s database and read by special devices to ensure that the tax on the products is paid.
His Excellency expressed his happiness over the increasing level of collaboration and response from businesses subject to Excise Tax with the FTA and their commitment to submitting Tax Returns and settling their due taxes on time.
“During the past period, we sought to reach out to all businesses to resolve obstacles that may affect their business performance or their compliance with tax regulations. We are constantly striving to develop our services and systems to ensure we implement the tax system smoothly and without friction. The high level of response we have seen from the business sector is a clear indication of their dedication to collaborating and complying with all the UAE’s tax system requirements,” H.E. concluded.
