UAE: Strongest excise tax

According to The Federal Tax Authority (FTA), UAE is registered with one of the highest compliance rates of 97.7% for excise tax returns requirements. 715 companies had registered for the tax returns post implementation of excise tax in 2017. This implementation has been well received by all concerned institutions at the local, regional and international levels.

From October1, 2017, the UAE charged 50% excise duty on fizzy drinks and 100% on tobacco and energy drinks. It is more introduced as deterrent to consumption of tobacco and high energy drinks. The World Health Organization (WHO) appreciated UAE’s anti-smoking efforts through this imposition of tax on tobacco products.

Annual revenue of approximately Dh7 billion was estimated to be generated from excise tax. In addition to this, the UAE implemented 5% value added tax (VAT) to broaden its revenue base amidst decline in oil prices.

Digital tracking of products for excise tax will commence soon. This will further enhance compliance. High compliance is a good omen for any tax laws and it's encouraging for administrators.

The high rate of commitment to Excise Tax Return submissions shall be attributed to the ease of the procedure provided by the authority to provide returns. The digital tax stamp scheme for tobacco products is most significant amongst all. This will come into effect from the beginning of 2019 and shall establish a comprehensive tracking framework. This framework shall support the authority's efforts in collecting taxes, combating tax evasion and upholding the rights and duties of taxable persons in the UAE.