UAE Tax LawFederal Decree by Law No. (7) of 2017 Concerning Excise Tax

Article (1) For the purpose of applying the provisions of this Decree-Law, the following words and expressions shall have the meanings assigned thereto respectively, unless the context requires otherwise: The State : The United Arab Emirates. The Minister : The Minister of Finance. The Authority : The Federal Tax Authority. The Tax : The Excise Tax. Excise Goods : Goods to be defined as taxable goods by a Cabinet resolution upon the proposal of the Minister. Importation : Brining goods or services into the State from abroad. Exportation : The departure of the goods from the State. Person : A natural or legal person. Taxable Person : Each person that is, or ought to be, registered for the tax purposes, pursuant to the provisions of this Decree-Law. Designated Area : Any fenced area intended to be a free zone and cannot be entered or exited except through a designated road, and any area identified by the Authority as being subject to the supervision of a warehouse keeper, in accordance with the provisions of the Executive Regulations of this Decree-Law.

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Federal Decree by Law of 2017 on Excise Tax 3 Warehouse Keeper : Any person who is approved and registered at the Authority to supervise a designated area in accordance with the provisions of the Executive Regulations of this Decree-Law. Tax Registration : A procedure under which a taxable person or the legal representative thereof registers for the tax purposes at the Authority. Tax Registration Number (TRN) : A unique number assigned by the Authority to each person registered for the tax purposes. Registrant : A taxable person holding a Tax Registration Number. Importer : The person who acts as the importer of excise goods on the date of importation for the purposes of customs clearance. Tax Return : The information and data specified for the tax purposes and provided by the taxable person in accordance with the form prepared by the Authority. Business : Any activity that is practiced on an ongoing, regular and independent basis by any person and in any place and involves or may involve trading in excise goods. Refundable Tax : The paid amounts that may be refunded by the Authority to the person, in accordance with the provisions of this Decree-Law. Due Tax : The tax that is calculated and levied under the provisions of this Decree- Law. Payable Tax : The tax which becomes due to be paid to the Authority. Deductible Tax : The tax paid, or deemed to have been paid, by the taxable person, which may be deducted by the taxable person under the provisions of this Decree-Law. Tax Period : A specific period for which the payable tax shall be calculated and paid. Administrative Fines : Amounts to be imposed on the person by the Authority for violating the provisions of this Decree-Law or the Tax Procedures Law.

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Federal Decree by Law of 2017 on Excise Tax 4 Administrative Fine Assessment : A decision issued by the Authority on due administrative fines. Stockpiler : A person who owns excise goods and cannot evidence that such goods have been previously subject to the tax under the conditions stipulated in the Executive Regulations of this Decree-Law. Customs Legislation : Federal and local legislation regulating customs in the State. Applying States : The GCC States, which apply the Tax Law under issued legislation. Tax Evasion : The person’s use of illegal means which cause reducing the amount of the due tax, the non-payment thereof, or the refund of a tax that such person is not entitled to refund. Tax Audit : An action performed by the Authority to audit business records, or any information, data or goods related to a person to verify the fulfillment of its obligations, pursuant to the provisions of this Decree-Law or the Tax Procedures Law. Tax Assessment : The Tax Assessment as defined in the Tax Procedures Law. Voluntary Disclosure : A form prepared by the Authority by which a taxpayer notifies the Authority of any errors or omissions in the Tax Return, Tax Assessment or tax refund application, pursuant to the provisions of the Tax Procedures Law. Tax Procedures Law : Federal Law No. (7) of 2017 on Tax Procedures, as amended, and any federal law superseding the same.

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Federal Decree by Law of 2017 on Excise Tax 5 Chapter Two Application, Scope and Calculation of the Tax

Article (2) of this Decree-Law before being registered for the tax purposes, in accordance with the provisions of this Decree-Law. 2. Without prejudice to the provisions of Clause (1) of this Article, the person liable for the due tax, pursuant to Article (4) of this Decree-Law, shall submit to the Authority an application for tax registration, pursuant to the provisions of the Tax Procedures Law, within thirty (30) days as of the end of any month during which such Person practices or intends to practice the activities set forth in Clause (2) of Article (2) of this Decree- Law, or as of the date of entry into force of this Decree-Law, whichever comes later. 3. The Executive Regulations of this Decree-Law shall determine the effective date of the tax registration referred to in this Article.

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Article (4) Tax Obligations 1. The due tax shall be charged on the following: a. The person practicing any of the activities set out in Clause (2) of Article (2) of this Decree-Law; b. The person participating in any of the activities set out in Clause (2) of Article (2) of this Decree-Law if the person who practices the activity fails to meet the tax obligation, in accordance with what is determined by the Executive Regulations of this Decree-

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Federal Decree by Law of 2017 on Excise Tax 6 Law; c. The warehouse keeper, where excise goods are released from a designated area and the payable tax is not previously paid, in accordance with what is determined by the Executive Regulations of this Decree-Law. 2. The following persons shall be excluded from the provisions of Clause (1) of this Article: a. The person who imports excise goods whose value is less than the value prescribed by the Customs Legislation, if such excise goods are carried by the person on an international trip and for non-commercial purposes; b. The stockpiler in case of meeting the conditions stipulated by the Executive Regulations of this Decree Law. Chapter Three Tax Registration and Cancellation thereof

Article (6) Exemption from the Registration 1. Notwithstanding the provisions of Clause (1) of Article (5) of this Decree-Law, the Authority may exempt any person from the tax registration when the tax becomes due, pursuant to Paragraphs (b) and (c) of Clause (2) of Article (2) of this Decree-Law, if the Authority finds that such person will not import excise goods on a regular basis, in accordance with what is determined by the Executive Regulations of this Decree-Law. 2. Whoever is exempted from the tax registration under Clause (1) of this Article shall notify the Authority of any changes, which may make him subject to the tax in accordance with the provisions of this Decree-Law, within the time limits and under the procedures determined by the Executive Regulations of this Decree-Law. 3. A person that carries out importation for purposes other than the practice of business shall be exempt from the tax registration, without prejudice to the obligation to pay the tax due for such importation. 4. The person’s exemption from the registration, pursuant to the provisions of this Article, shall not prejudice its obligation to pay any due tax or administrative fine under the provisions of this Decree-Law or any other law.

Article (19) Payment of the Tax 1. The taxable person shall pay the payable tax on the date of submitting the tax return, in accordance with the provisions of Article (18) of this Decree-Law and as per the procedures to be determined by the Authority. 2. Any person exempted from the registration under Clause (1) or Clause (3) of Article (6) of this Decree-Law shall pay the due tax at the time of importing excise goods. 3. Any person that receives any amount as a tax or any amount invoiced shall pay it to the Authority. Such amount shall be subject to the same treatment established for the due tax under the provisions of this Decree-Law. Chapter Eight Carrying forward the Excess Refundable Tax

Article (20) Excess Refundable Tax 1. The taxable person shall carry forward any excess refundable tax to the subsequent tax periods and offset such excess against the payable tax or any administrative fine imposed pursuant to the provisions of this Decree-Law or the Tax Procedures Law in the subsequent tax periods until such excess is fully utilized, in the following cases: a. If the deductible tax of the taxable person, pursuant to the provisions of Article (16) of this Decree-Law, exceeds the due tax for the same tax period; b. If the tax paid by the taxable person to the Authority exceeds the payable tax in accordance with the provisions of this Decree-Law. 2. If there is any excess for any tax period after being carried forward for a period of time, the taxable person may submit to the Authority an application for claiming a refund of such excess in accordance with the periods and procedures determined by the Executive Regulations of this Decree-Law.

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Article (21) Tax Refund in Special Cases The Authority may, based on an application to be submitted thereto, may refund the tax to the following: 1. Foreign governments, international organizations and diplomatic bodies and missions, for the tax paid thereby while performing their official activities, in accordance with the conditions, controls and procedures determined by the Executive Regulations of this Decree-Law, subject to reciprocity. 2. The person who is registered in an applying state if he pays the due tax in the State and then exports the excise goods to an applying state, in accordance with the conditions, controls and procedures determined by the Executive Regulations of this Decree-Law. 3. Any persons or categories to be determined under a Cabinet resolution, upon the proposal of the Minister. Chapter Nine Violations and Penalties

Article (22) Administrative Fines Assessment Subject to the provisions of Tax Procedures Law, the Authority shall issue an Administrative Fine Assessment to the taxable person and notify him thereof within five (5) working days as of the date of issuance, in case of committing any of the following violations: 1. Failure by the taxable person to display the tax-inclusive prices in accordance with the provisions of Article (11) of this Decree-Law; 2. Failure to adhere to the conditions and procedures to be followed for transferring the excise goods from a designated area to another and the mechanism of maintaining, storing and processing the same; 3. Failure by the taxable person to provide the Authority with the price lists of excise goods produced, imported or sold thereby, in accordance with the provisions of the Executive Regulations of this Decree-Law.

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Article (23) Tax Evasion Without prejudice to the cases of tax evasion set forth in the Tax Procedures Law, a person shall be deemed to have committed a crime of tax evasion and shall be punished pursuant to the Tax Procedures Law if he commits any of the following: 1. Bringing or attempting to bring excise goods into or out of the State without paying the due tax in whole or in part; 2. Producing, transferring, acquiring, storing, transporting or receiving excise goods for which the due tax has not been paid with the intention of evading payment of the due tax; 3. Placing false labels on excise goods, in violation of the provisions of Clause (2) of Article (24) of this Decree-Law, with the intention of evading payment of the due tax or receiving an unjustified refund; 4. Submitting any false, counterfeit or fabricated documents, returns or records, with the intention of evading payment of the due tax or receiving an unjustified refund. Chapter Ten General Provisions

Article (24) Record Keeping and Evidentiary Requirements 1. Without prejudice to the provisions related to record keeping contained in any other law, every taxable person shall keep the following records: a. Records of all excise goods produced, imported or stockpiled; b. Records of excise goods exported and evidence of such exportation; c. Records of stock levels, including details of lost or destroyed items; d. A tax record that shall contain the following information: 1) The due tax on the imported excise goods; 2) The due tax on the produced excise goods; 3) The due tax on the stockpiled excise goods; 4) The deductible tax in accordance with the provisions of Article (16) of this Decree- Law.

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Federal Decree by Law of 2017 on Excise Tax 14 2. The Cabinet shall, upon the proposal of the Minister, identify the excise goods on which labels indicating that the tax has been paid shall be placed and the relevant conditions and procedures. 3. The Executive Regulations of this Decree-Law shall determine the periods, conditions and controls necessary for keeping the records set out in Clause (1) of this Article.