Tax is a compulsory contribution that citizens of any country must make to the government so that they can provide essential public services. This applies to both citizens and expatriates. The business transaction process leads to the import and export of goods and services. Now, there are several types of taxes on these goods. One such type is the excise tax. This is a tax imposed on imports of limited goods that are detrimental to human health.
Taxes are taxes imposed on certain products and services by authorities, such as the excise and taxation department of a country. The concept of taxation is not new and has existed for centuries. The new excise tax rates for the UAE government will come into effect soon. It will further increase the prices of certain categories of products sold in the country. Questions are being asked about how the excise tax on the UAE will affect many people and businesses.
With global business going on between different countries, entering into double tax treaties becomes an advantage. The Double Tax Agreement is an agreement signed by the two countries to avoid double taxation and to encourage the development of business relations between the two countries.
Key Features of Excise Tax
- It is mainly charged with consumables
- It applies to specific commodities
- It is charged during production or import stage
- A business collects it in the name of the tax authority
The FTA is committed to providing extensive support and guidance to assist with this; however, it is its responsibility to ensure that any required compliance obligations are met. The United Arab Emirates (UAE) Ministry of Finance (MAF) has announced the expansion of product categories subject to excise items, including electronic smoking devices, liquids used in smoking devices and sweetened beverages.
As a welfare state, the UAE government provides education, healthcare, the environment, and other services. In addition, they are investing in developing world-class infrastructure. To rely on the recent volatile oil-based economy, new methods of financing are needed.
The FTA has the power to audit tax-paying corporations and prosecute those who do not comply with the law. The Federal Tax Authority (FTA) has introduced an excise duty with effect from October 2017. Business registration for excise tax is available through the e-Services section available on the FTA website. The excise tax registration service must submit certain mandatory documents to obtain the UAE tax number.