Excise Tax Dubai UAE
Excise Tax Dubai UAE has already come into action. But you need to know these things about excise tax to escape the taxation in Dubai.
The new tax system will lower the consumption of unhealthy products. This in turn is expected to increase the sources of state income.
The Excise Tax (From October 1)
Indirect Charge on a specific product charged in a country where the goods is to be consumed. It is typically the products that are harmful to human health. Excise Tax is only paid once as it will not be charged at every supply chain.
Also excise tax is built into the price of the goods when it is sold. The producer or manufacturer specifies a recomended retail price of the goods and calculates tax on the base value. (There may be special rules in some cases).
Who needs to pay Excise Tax Dubai UAE?
- Stock pilers
Excise registered business will have to file a tax return every month and pay the due tax to the FDA.
Finally in some cases the business will be able to delay the payment to the Excise tax by using a designated area treated as outside the UAE for tax purposes. So the goods leave the designated zone. Therefore anywhere can be a designated zone as long as it meets the requirements and is approved by the FDA. But a warehouse keeper needs to be appointed to be responsible for it.
Will you be able to Reclaim it?
There will be limited number of cases where the refunded tax will be given usually only when the goods won’t be consumed within the country.
What The Travelers Need To Do?
If you bring in a low value excise goods to the UAE, you will not have to pay the excise tax. But if it exceeds a certain value you will have to pay the excise tax.
50% Tax on:
- Soft Drinks
- Carbonated Sugary Drinks
100% Tax on:
- Energy Drinks
- Tobacco Products
What is the Purpose?
This tax is implemented on the unhealthy goods. It has been considered as the largest ever implemented taxation anywhere because it is just twofold.
- To halt the rapid increase of lifestyle diseases like diabetes and obesity.
- To boost the state revenue which was collapsed by oil prices 3 yrs ago.
How much are the products charged?
- A Can of Soda was Dh2 earlier, Now it will be Dh3.
- Cigarettes will now cost Dh20 (depending on the cigarette brand)
- Energy Drinks will now cost around Dh16.
Where will in be implemented?
The Excise Tax Dubai UAE will be implemented in:
- Anywhere where you can buy these products inside UAE
Tobacco consumption will lowered by 40% as it will be 100% taxed.
Finally packet of cigarette will cost double as before so it will help in improving the public health and hence boosting national health tax revenue that can be used to fund public health services.
Also WHO has praised UAE for imposing a heavy tax on the unhealthy products like tobacco.
Dr Frank Hu (Professor of Nutrition and Epidemiology), Harvard School of Public Health made a case in 2013 that decreasing sugar consumption will result in reducing prevalence of obesity and related diseases.
Also Diabetes Care in 2010 found that a person who consumes 1 or 2 cans of sugary drinks a day has 26% more risk of developing Type2 diabetes.
Countries like UK are planning for taxation on sugary drinks.
Financial Reason of Taxation
Oil prices fell sharply in 2014. Due to lesser demand in the developing countries because of slow economic growth and stronger output from US producers, GCC countries had to consider the ways to fund this state project. Because the oil income is now almost cut by half.
6 countries of the GCC has decided to introduce Tax system to boost their state revenue, hence continue rapid developments and modernization.
Estimated Revenue by Tax
Dh 7 billion annual revenue for Federal Budget.
(In UK it was estimated to be Dh 2.45 billion).
Furthermore Centre for Diseases Control and Prevention (CDC) in US estimated in 2005 that medical costs attributable to obesity alone was Dh 698.6 billion. (20.6% of all medical expenses)
Since Emirates has an alarming rate of rising obesity, this is being implemented. Therefore research and studies were conducted by the UAE university on children. Also this new step will help in improving the health conditions for many more years to come.
What the companies feel after tax?
According to survey the companies are worried about this new system of tax implemented overnight.
Some say this must have come bit by bit so that they do not disrupt the sales all at once.
Tobacco and energy drink companies are going to face a deep steep in their business. They say it will be expensive for common peoples.
Some call this Excise Tax Dubai UAE in colloquial name as the “Sin Tax”
How To Avoid Excise Tax Dubai UAE?
Since the tax is only on the harmful products, the best way to avoid is by stopping the consumption of harmful products. Though some harmful products are excluded from the excise tax, most of the addictive products are included.
This might be a sad thing for the smokers and people who love drinking carbonated drinks. But you still have an opportunity to escape this tax by enjoying these unhealthy products while you are out of the country.
Furthermore you can not bring them inside the country in any manner, therefore stay healthy while you are in UAE.
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