Products are usually charged when released for consumption. During this time, the manufacturer, or importer of the goods will have the excise tax collected from them. However, in some cases, to prevent collecting the Excise Tax twice in one supply chain (e.g., raw tobacco will have excise tax charges, and again when it’s been manufactured into cigarettes).
Excise Tax will only be applied:
i) at the time of excise goods production,
ii) at the time of importing the excise goods,
Excise Tax can be charged using two methods:
Ad Valorem is Latin for “according to value”. In this method, the tax is charged based on the value of the goods or services.
This method charges based on the specific rate of the quantity (e.g., pack, kilogram)
Excise Tax in GCC is imposed using the Ad Valorem excise tax method.
Compliance with Excise Tax:
The Excise Tax Law gives a period for the tax payment.
Before a manufacturer removes its locally produced goods, he is responsible for the payment of the excise tax to the authorities.
Before imported goods are removed from customs, the importer should pay the Excise Tax to the authorities.
On a monthly basis, it is expected that Excise Tax returns are filed electronically. Within 15 days of the filing, the amount stated shall be paid to the FTA.
Excise Tax Registration:
Any business involved in the following is required to pay excise tax:
Excise Taxes will apply to the following goods:
a) Carbonated drinks (50%)
Examples include Pepsi, Coca-Cola, Fanta, etc. Concentrations, powder, gel, or extracts that are produced for concocting them into carbonated drinks are also included, the only exception being flavored water.
b) Tobacco products (100%)
c) Energy drinks (100%)
These are drinks marketed as having physical and mental enhancement and include stimulants that increase alertness. For example, caffeine, taurine, ginseng, and guarana. Products that have the same effects are also considered as one. Concentrations, powder, gel, or extracts that are produced for concocting them into energy drinks are also included.
No minimum annual income is required for the Excise Tax.