UAE Excise Tax Update
UAE’s Federal Tax Authority (FTA) has issued Federal Tax Authority Decision No. 1 of 2021 which highlights the Mechanism for Calculating the Average Retail Selling Price of Excise Goods in the Market. The following major points are covered:
- Article 1 – Calculation of the Average Retail Selling Price in the Market
- Article 2 – Excise Goods Not Intended for Retail Sale in the State
- Article 3 – Implementation of the Decision
Article 1 – Calculation of the Average Retail Selling Price in the Market
- A Taxable Person shall undertake the following procedures to calculate the Average Retail Selling Price of Excise Goods in the Market for the purposes of identifying the Designated Retail Selling Price :-
- Identify the different Retail Selling Prices of the Excise Goods which are charged by the retailer when the Good is sold to consumers during the 12-month period preceding the month in which the average retail price is calculated.
- Deduct the value of Value Added Tax and Excise Tax to calculate the tax-exclusive Retail Selling Price
- Multiply the total number of units of the Excise Goods by the Retail Selling Price to determine the total revenues.
- Divide the total revenues in the Market by the total number of units of the Excise Goods sold.
- Multiply the resulting figure by the Excise Tax rate applicable to the Excise Good to arrive at the notional Excise Tax due on the Excise Good.
- Add the figures resulting from (d) and (e) to arrive at the Average Retail Selling Price of the Excise Goods in the Market.
2. The Taxable Person shall identify the different Retail Selling Prices of the Excise Good based on the following:
- Where the Taxable Person deals with a maximum of two customers, the Taxable Person shall identify all the different Retail Selling Prices of the Excise Good sold to these two customers.
- Where the Taxable Person deals with more than two customers a sample of the Retail Selling Prices representing at least 50% of the total volume of sales should be identified and involving a minimum of three different customers.
- The recommended Selling Price of the Excise Good as specified by the producer of the Excise Good, where the Excise Goods have not previously been sold for retail purposes in the State.
Article 2 – Excise Goods Not Intended for Retail Sale in the State
- The Taxable Person shall use the value of the imported Excise Good as a substitute for the Average Retail Selling Price in the Market where
- Exported outside the State
- used in the production of a new Excise Good
- The Import value of the Excise Goods shall include the Customs value pursuant.
- When Excise Goods are produced for the purpose of being exported, the Average Retail Selling Price of the Excise Goods should be the price at which they are sold.
- Where Excise Goods are produced in the State for the purpose of being used in the production of a new Excise Good the Average Retail Selling Price should be the price at which the Goods are designated for sale to the producer of another Excise Good.
- The Authority may request the Taxable Person to provide such supporting evidence as required to confirm that the Excise Goods are not intended for retail sale within the State or that they were not actually sold therein
- Where a change of intention arises after Excise Tax has been declared the Taxable Person shall adjust the Excise Price.
Article 3 – Implementation of the Decision
This Decision shall be implemented as of 28th of April 2021.