Question

A company dealing in consumable products is established in Oman and wants to import goods into the UAE which are excisable from the UAE excise tax standpoint. It is currently looking for different options to set up a business/register it in the UAE mainland area or free zone area. Please briefly explain what is the process to register a company from an excise tax standpoint in the UAE and which area (free zone vs mainland) is feasible for them. Also, they want to defer the payment of excise tax and store the goods into a warehouse. What should they do in order to avail of this option?

Hint: Please note that all the UAE free zones (from a customs perspective) are not designated zones from the UAE excise tax perspective.

Answer 1

1) Process of registration of company in UAE from excise point.

Person importing following goods compulsory required to obtain registration under excise tax in UAE

1. Tobbaco & Tobbaco products

2. Electronic smoking device

3. Energy drink

4. Sweetened drink

5.corbonated drinks.

Assume that company importing a above mentioned goods.

Federal Tax Authority in UAE is levied custom duty along with excise tax on import of above goods. Goods produced or manufactured in UAE are also liable for excise.

To register a company in UAE require.

1. Deciding who is local partner

2. Name & activity approval from economic department.

3. Business premises and tenancy contract

4. Make MOA and submit it.

5. Submit application for License for business.

Registration in Free zone

There are 40 free zone in UAE designed for one or more commercial category offering license to operate in free zone only in case of designed category of business.

Main reasons for establishment in free zone is that

1. There is no foreign ownership restrictions.

2. Company operate as per free zones FTA.

3. 100% personal &corporate tax ex emoticon.

4. No currency restrictions

5. Excellent support services.

Registration in main land

1. Require all license of mainland

2.In case of limited liability company 51 % shares are held by UAE national.

3. Company registered in main land can tarde freely within and outside UAE .

In freezone there is market restrictions, trade within free zone only, good's distribution outside free zone required to pay 5%duty.

Considering the benefits of Free zone company can register there.

2) Company in UAE required to file excise return by within due date. Any delay in payment of excise tax penalty is levied. Current situation of Covid 19 there is deferment of payment of taxes in UAE.

Excise warehouse- Also known as designated zone, within the UAE no excise tax levied on goods within warehouse and transfer between warehouse. Excise imposed only when goods leave warehouse for free circulation in UAE.

For excise warehouse company required to obtain registration, pay service fees.