FTA: Clarification Public Tax Excise

There are certain limited cases envisaged under Cabinet Decision No. 37 of 2017 on the Executive Regulation of the Federal Decree-Law No. 7 of 2017 on Excise Tax (“the Executive Regulation”), where relief from excise tax is available for excise goods that are found to be deficient, or there is a shortage in their quantity, within an excise tax designated zone.

In addition, there may also be circumstances where a business may seek relief from the Federal Tax Authority (“FTA”) from paying the Excise Tax associated with goods destroyed within a designated zone.

In order to destroy excise goods and obtain the relief mentioned above, the FTA must be notified of the deficiency or shortage, and its approval must be obtained in line with the process outlined in this document.

Summary

In principle, goods that are considered ‘wastage’ or are deficient or there is a shortage of the expected quantity when located within a designated zone, will be treated by the FTA as having been released for consumption and, therefore, will be subject to excise tax.

As an exception to the above provision, the Executive Regulation allows for a relief to be granted from accounting for excise tax on goods located within an excise tax designated zone in certain cases. Such relief is available where the warehouse keeper responsible for the excise goods follows the process outlined in this document.

Relief will only be granted where the FTA is notified by the warehouse keeper within the specified timeframe and accepts that the deficiency in, or shortage of, the excise goods are due to a legitimate cause.

Where a taxable person intends to destroy excise goods located within a designated zone, they must first obtain prior approval from the FTA in order to destroy the goods.

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