Excise returns provide detailed information about the excise tax liability, collections, and other relevant data required by the tax authority. They serve as a means for businesses to report their excisable activities, calculate the amount of excise tax owed, and fulfill their obligations under the applicable tax laws and regulations.
The content and format of excise returns can vary depending on the jurisdiction and the specific requirements set by the tax authority. Typically, excise returns require businesses to provide information such as the quantity or volume of excisable goods produced, imported, or sold, the applicable tax rates, any exemptions or deductions claimed, and other relevant details pertaining to excise tax liability.
The process of filing excise tax returns can vary depending on the jurisdiction and the specific regulations in place.
Determine Reporting Period: Understand the reporting period for filing excise tax returns. This could be monthly, quarterly, or annually, depending on the regulations of your jurisdiction.
Gather Required Information: Collect all the necessary information and documentation needed for the excise tax return. This may include records of excisable goods produced, imported, or sold, tax rates, exemptions or deductions claimed, and any other relevant details required by the tax authority.
Prepare the Excise Tax Return Form: Obtain the official excise tax return form from the tax authority or their designated portal. Fill out the form accurately, providing all the requested information based on the records and data you have collected.
Calculate Excise Tax Liability: Calculate the excise tax liability based on the applicable tax rates and the information provided in the return form.
Report Excise Tax Liability: Enter the calculated excise tax liability amount in the appropriate section of the return form. Provide any supporting information or breakdowns as required by the tax authority.
Submit the Excise Tax Return: Once the return form is completed, submit it to the tax authority within the specified timeline.
Payment of Excise Tax: If there is an outstanding excise tax liability, make the necessary payment to the tax authority within the specified timeframe.
Record Keeping: Maintain proper records of the filed excise tax returns, payment receipts, and any supporting documentation.
Compliance and Timely Filing: Ensure that the excise tax returns are filed accurately and within the designated deadlines. Late or incorrect filing may result in penalties or other consequences, so it is crucial to comply with the regulations and adhere to the reporting requirements.
Process of Filing Returns for Excise Tax in UAE
The followings are the requirements and steps that are involved in the filing of excise tax returns;
Registration for excise tax: Businesses that import or produce excisable goods in the UAE are required to register for excise tax. Registration can be done through the Federal Tax Authority (FTA) website. Businesses must provide their trade license, the Emirates ID of the authorized signatory, and any other relevant documents.
Filing frequency: Excise tax returns must be filed on a monthly basis, regardless of whether any tax is due or not. The deadline for filing returns is the 15th day of the following month.
Documents required for filing: To file excise tax returns, businesses must provide a summary of all sales and purchases of excisable goods during the month. This includes the quantity, value, and tax amount of each product.
Calculation of excise tax: Excise tax is calculated based on the retail selling price of the product, including any VAT. The tax is calculated using the following formula: Excise tax = Retail selling price x Excise tax rate.
Filing deadlines: Excise tax returns must be filed on a monthly basis, regardless of whether any tax is due or not. The deadline for filing returns is the 15th day of the following month. Late filing of returns may result in penalties.
Process of Payment for Excise Tax
Payment methods : Excise tax payments can be made through various methods. The most common method is through the FTA’s e-services portal, which can be accessed via the FTA’s website. Payments can be made using a credit card or through a bank transfer. Alternatively, payments can be made through one of the approved banks in the UAE.
Payment deadlines : Excise tax payments must be made on a monthly basis, along with the filing of returns. The deadline for payment is the 15th day of the following month. It is important to note that payments must be received by the FTA on or before the deadline, not just initiated by the deadline.
Consequences of late payment: Late payment of excise tax may result in penalties and interest charges. The penalty for late payment is 2% of the unpaid tax for the first seven days of delay, with an additional 4% penalty for each subsequent month of delay. In addition, interest charges of 1% per month may also apply. The total amount of penalties and interest charges can be up to 300% of the original tax amount owed.
Frequently Asked Questions
The following groups are required to register for excise tax:
- Producers of excise goods.
- Importers of excise goods.
- Stockpilers of excise goods.
- Warehouse keepers supervising designated zones for Excise Tax purposes (where applicable).
Businesses that are required to pay excise tax should do the following:
Register with the FTA;
Submit excise tax returns on a monthly basis; and
Pay the excise tax due on the same date as submitting a tax return.
The Executive Regulation of the Excise Decree-Law shall specify the Tax Period usually a month and the exceptional circumstances under which the Federal Tax Authority may amend the Tax Period.
The Taxable Person shall submit a Tax Return to the Authority at the end of each Tax Period within the time frames and in accordance with the procedures specified in the Executive Regulation of this Decree-Law.
The Taxable Person shall settle the Tax Due on the same date of submitting the Tax Return.
Any Person exempted from registration shall pay the Tax Due whenever importing Excise Goods.
An Excise tax return is nothing but a formal way of reporting Excise Tax paid during a specific duration, usually a month. An Excise tax return summarizes goods imported, produced and excise tax paid which helps authorities / taxable persons in reconciling the tax paid in an event of an investigation, inventory reconciliations, tax audits etc.
The Delay in filing returns and non-filing may attract penalties by the Federal tax authorities. It is therefore recommended to file Excise tax returns, irrespective of the Excise tax paid.
The tax period to file the excise tax returns is one month. As a business, you should file your excise tax returns via the FTA online portal within 15 days of the tax period. Excise tax should be paid 15 days after the end of the calendar month. If the deadline falls during the weekend or national holiday, it would be shifted to the first working day following the holiday or the weekend.
The duration for which you need to keep records of your excise tax returns can vary by jurisdiction. It is advisable to check the specific regulations in your jurisdiction regarding record-keeping requirements.