Overview
The Excise Tax is a tax on specific goods which are normally seen as harmful to individuals’ health or to the environment, and referred to as "Excise Goods".
The Excise Tax is collected by businesses on behalf of the Secretariat General for Taxation ("SGT"). The tax is self-assessed and businesses will submit their Excise Tax returns and pay the tax due periodically to the SGT.
As a consumption tax, the Excise Tax is ultimately borne by the final consumers - but collected earlier in the supply chain. Importers, manufacturers and, in certain cases, other agents in the supply chain are liable to register for the Excise Tax, submit periodical returns, and pay the Excise Tax due to the SGT, and maintain supporting documentation.
How will the Excise Tax be charged and collected?
The Excise Tax is normally payable at the production stage, or at the time of import of Excise Goods. The Excise Tax is calculated by applying the applicable rates on the value of the goods. The value of the goods will be the higher of the retail selling price or of the standard price determined by the SGT on the Excise Goods. For example, the Excise Tax will apply at a rate of 100% in case of tobacco products. Under the Law, registering for the Excise Tax is the responsibility of any person:
- Producing Excise Goods
- Importing Excise Goods
- Releasing Excise Goods for consumption
- Holding any Excise Goods for which the tax due has not been paid
- Licensed at the time of the release of an Excise Good at the end of the suspension of tax
- Licensed in the transfer of Excise Goods (in the event of non-compliance with respect to the suspension of tax provided for in the Regulations)
- Licensed upon the release of Excise Goods for consumption, which have been lost or damaged during the suspension of tax
In addition, any business which disposes of goods which are subject to Excise Tax at the time of the implementation date will be required to submit a one-off "transitional return" and pay Excise Tax on the inventory it holds.
The Excise Tax is suspended when Excise Goods are located in a tax warehouse or transported between tax warehouses under a tax suspension scheme. In such cases, the Excise Tax will only levied once the Excise Goods are released for consumption from the tax warehouse. In certain cases, the Excise Tax may be refunded (i.e., supplies to diplomatic missions). Certain transactions are generally exempt from Excise Tax (i.e., supplies to diplomatic missions, travellers’ allowances).
There will be special treatment of intra-GCC movement of Excise Goods, which are to be taxed in the place of consumption. There will be a need for common GCC mechanisms to collect and monitor the Excise Tax due in the appropriate GCC country.