A Public Clarification on the Excise tax Registration of Warehouse Keeper and Designated Zones

excise tax registration for warehouse keepers on designated zones

Public Clarification on Registration of Warehouse Keeper and Designated Zones

The Federal Tax Authority has released a Public Clarification on the Registration of Warehouse Keeper and Registration and Renewal of Designated Zones in the UAE which comes into effect from 1st April 2023. 

Any person who operates or intends to operate an excise tax designated zone, must register himself as a Warehouse Keeper and register the designated zones he intends to supervise. The warehouse keeper is required to provide details with respect to the goods kept in the Designated Zone (DZ), Financial guarantee, proof of adequate physical security, and proof of maintenance of a stock and record management system.

The key aspects detailed in the clarification are as below:

1. Status of Designated Zone: 

A designated zone can become ‘suspended’ or ‘expired’ on non-compliance of the requirements set forth by the FTA, or delay in submission of renewal application. In case of suspension or expiry of a DZ, the imports into, production and transfers from other DZs will be suspended. All the goods in the DZ at the end of suspension period will be treated as released for consumption and Excise Tax will be due on the goods. 

2. Quantity of Excise Goods in Designated Zone: 

The average month-end closing stock of Excise goods that will be or has been in a warehouse being registered as the Designated Zone will have to be provided to the FTA. The warehouse keeper is required to monitor the average month-end stock stored in the DZ for 6 months following registration and notify the FTA if the average monthly closing stock exceeds 20% of the originally reported quantity.

3. Physical security: 

An applicant is required to provide sufficient evidence to prove physical criteria, which include sufficient space, identifiable locations, secured access, alarm and anti-intrusion systems, security lighting, and logs of entry and exit. The FTA may physically visit the premises to ensure physical security and in case of unsatisfactory measures, the applicant is allowed 20 business days to implement the measures, failing which would lead to non-registration or suspension of the DZ.

4. Stock and Record Management System: 

The warehouse keeper must implement an accounting and inventory management system that provides a clear audit trail of all excise goods entering and leaving the DZ. The system must identify the stock level at any point, value, and quantity of goods entering, exiting from, produced in, or being transferred from the DZ to another DZ or for export. Failure to comply with the requirements of the FTA within 20 business days could lead to non-registration or suspension of DZ.

5. Renewal of DZ:

A Designated Zone is registered for 12 months, and the warehouse keeper is expected to apply for renewal at least 20 working days before date of expiry. Failure of submission within the time period would lead to suspension and further expiry of the DZ. A new application needs to be submitted to register a DZ that expired due to late renewal.

6. Financial Guarantee: 

Based on the information and documentary evidence, the FTA will notify the amount of Financial Guarantee which has to be provided within 40 business days. The Financial Guarantee will be determined based on the compliance risk-based history of the applicant, as detailed in EXTP008, at an amount not less than AED 175,000 and capped at AED 25 million, on fulfillment of conditions set by the FTA.

This Public Clarification (EXTP010) provides more details on the conditions and criteria to register as a warehouse keeper and to register or renew the registration of a designated zone and replaces the earlier clarification EXP005.

Our Services: 
Registration of Warehouse Keeper | Registration of Designated Zone | Renewal of Designated Zone 

Queries and Support:

Mr.  Hari Krishnan NPS
+971 56 578 7047


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