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FTA Launches A New Excise Tax Reporting Requirement

On 22nd November 2020, the Federal Tax Authority (FTA) launched a new excise tax reporting requirement for business entities in the UAE. In this announcement, authorities stated that businesses need to submit an opening stock declaration from 1st January 2021 to 31st January 202, submissions will be accepted. The latest provision is especially for the warehouse keepers of one or multiple designated zones in the UAE which holds the stocks of an excise taxpayer. 

What is the Opening Stock Declaration?

The stock of taxpayers registered with FTA for Excise Tax needs to be declared to disclose the opening stock held in the designated zone. It is an online form (EX204) which is available on the official website of the Federal Tax Authority. This opening stock declaration form is introduced to control the movement of inventory in the designated zones of the UAE. The warehouse keeper must comply with this new excise tax reporting requirement by FTA. 

Aim of New Reporting Requirement

The FTA implements this new reporting requirement mainly to control and handle the movement of excise products in the designated zones & to promote excise tax compliance for the taxable businesses operating in the UAE. The opening stock declaration will also support efforts to reduce illegitimate transnational trafficking of excisable goods under the FTA. 

Is the Declaration Available to an Excise Non-Registant?

Yes, the stock of non-registered owners can be declared to the FTA by submitting the EX204A Non-Registered Excise Stock Movement Declaration. Once you are registered for the UAE designated zone the tax person will continue the process for all the next periods.  

Process of Excise Goods Opening Stock Declaration

To effectively implement the new excise tax reporting requirement, the warehouse keeper must comply with FTA standards. You can implement these following steps that will make your life & the process a lot easier:

  1. Hire External Auditors

The warehouse keeper who holds the excisable goods must hire external certified auditors in the UAE. The third party auditors need to check the opening stock as of 1st January 2021 for each designated zone per excise tax registrant. For FTA penalties to not occur in the future, the records must be audited by independent auditors. 

2. Completing the Declaration Form

Upon completing the audit, the operator of the warehouse needs to fill out the opening stock declaration form provided by the FTA. It contains pre populated fields requiring valid information and documents that comply with the UAE excise tax laws. The most noticeable thing is that each declaration is submitted by only one excise tax registrant per designated zone. In order to ensure compliance with FTA guidelines, the applicant should review all details before submitting the form. 

3. Approval for Opening Stock Declaration

The last and most significant step is the approval of the opening stock declaration by the excise tax registrant. The warehouse keeper must approve the declaration form by tax registrants who hold goods in multiple designated zones. If an operator has stocks in more than one designated zone, each zone must be approved. 

Failure to Submit FTA Declaration

When an entity fails to submit their Opening Stock Declaration on time, FTA will impose administrative penalties. The tax authority will hold the stock in the Designated Zones to zero and restrict entities to move inventories out of the Designated Zone. 

The United Arab Emirates tax system is not complicated, but it can be quite challenging for ordinary tax agents. In order to relieve yourself from FTA sanctions or prosecutions you should take professional tax consultancy in Dubai, Sharjah, Abu Dhabi and any other Emirate. The experts will assist business owners in the implementation of the new excise tax reporting requirement on excisable goods as per FTA guideline. Get in touch with the best tax advisors!

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