Updates – Stockpiling of Excise Goods

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Introduction & Summary

Federal Tax Authority (“FTA”) issued Public Clarification (EXTP003) to explain the Excise Tax obligations for stockpilers of sweetened drinks, electronic smoking devices and tools, or liquids used in such devices and tools and tobacco products, which have been subject to Excise Tax at a price lower than the minimum excise price and which are held for business purposes w.e.f. 1 December 2019.

When a business would qualify as Stockpiler?

A business would be considered as Stockpiler in the UAE if the following conditions are met:

  • The business held excise goods in free circulation in the UAE, intended to be sold in the course of business and Excise Tax on those goods has not been paid, remitted, relieved or deferred; and
  • The business held ‘excess’ excise goods.

Where a business meets the above conditions, they become liable to pay Excise Tax on “excess” excise goods held as on 1st December, 2019.

In order to identify whether stockpiled excise goods are “excess” or not, the business must perform two calculations:

  • Calculation A – Computation of excess stock held as on 1st December 2019 over average monthly stock holding level, and
  • Calculation B – Computation of excess stock held as on 1st December 2019 over two times average monthly sales volume.

Higher of above computation will be consider as “excess” excise goods held by stockpiler.

Note that this calculation must be performed on an individual product level, rather than on the overall category of excise goods.


In addition to the above, in line with the provisions of the Excise Tax legislation, a person, in the course of conducting business, is required to keep audited records, showing the quantity of his stock of excise goods for the 12-months prior to 1 December 2019 for the purposes of ascertaining the stock of excise goods, regardless of whether the stock is considered ‘normal’ or ‘excess’.

TRC Pamco is offering specialized Excise Tax advisory to many of its clients and will be ensuring that the companies are mitigating their risk and exposure while this transition.

We assist in Excise Tax registrations and the compliance obligations; and are committed to assist our clients to obtain the best possible practical knowledge to ensure compliance in a cost-effective way.

Please let us know if you have any queries and our team will be happy to schedule a session to address all your queries and requirements.