An excise tax is an indirect tax which is imposed on the sale of Excise Goods. If the excise goods are imported, manufactured or stockpiled in the UAE then they are subject to Excise Tax. Excise tax is imposed on those goods which have an unhealthy impact on our life if consumed. So, the main reason to levy Excise Tax on those kinds of goods is to reduce consumption in order to live a healthy lifestyle.
A registered person can apply to the tax authority to discontinue the excise tax registration if he is no longer liable for excise tax as per the provisions of the law. This process is called Deregistration.
When the taxable person stops the taxable activities like import, production or stockpiling of excise goods in the UAE. The Taxable person can De-register by completing the De-Register application form through an online portal. He should specify the date from which the Taxable person is required to De-Register. A registered person shall notify the Authority as well in order to deregister within 30 days from the date he no longer has a taxable supply.
As per the provisions of the law, the authority shall respond to the deregistration application within 20 business days of the receipt of the application. In order to complete the deregistration, the applicant must settle all the tax dues as per the law along with the tax returns. The applicant is also liable to settle all the administrative penalties that are due at the time of deregistration.
If the registered person doesn’t deregister within the prescribed time period as per the law (30 days from the date you are required to apply for deregistration), it will attract penalty from the Authority. The failure of the Registrant to submit a deregistration application within the timeframe specified in the Tax Law will attract an administrative penalty of AED 10,000 as per Table (1): Violations and Administrative Penalties related to the Implementation of the Federal Law No. (7) of 2017 on Tax Procedures.
Company X was a producer of excise goods and registered with the FTA for Excise Tax with effect from (wef) December 1 2017. Company X was no longer liable for Excise Tax from June 3 2018. On July 12 2018, Company X applied with the FTA to deregister w.e.f June 3 2018. On July 13 2018, FTA approved Company X’s deregistration application and confirmed the effective date of deregistration as July 3 2018.
As Company X did not notify FTA of his tax deregistration within (30) thirty days from when he is no longer responsible for the excise tax, a late deregistration penalty of AED 10,000 is due. Company X is required to submit and settle the payment for a final tax return (for the period from June 1, 2018, to June 3 2018) before July 15 2018.
At Emirates Chartered Accountants Group, we offer Tax Services all over UAE in Dubai, Abu Dhabi, Sharjah, Ajman & RAK. We have also stared in our operations in Bahrain. Tax Consultants provide the clients with proper support & guidance in compliance with the provisions of the UAE Tax Laws.
Our Tax Experts have experienced in various industries and advise the businesses towards a sustainable Tax strategy in accordance with the provisions of UAE VAT law.
Mr Pradeep Sai
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