The Federal Tax Authority (“FTA”) has published a public clarification to provide the guidance on excise goods, which are deficient or missing and the process for the destruction of Excise goods within a Designated zone.

The key highlights of this public clarification are as follows:

Excise goods that are considered wastage or are deficient when located within a designated zone will be treated as released for consumption and therefore will be subject to excise tax. However, as an exception, goods will not be considered to be released for consumption where:

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• Warehouse keeper notifies FTA within 30 days of discovering the deficiency in stock or shortage in quantity. This notification is given through a form on the e-services portal – Lost and Damaged declaration EX203B; and

• ●
• Shortage or deficiency is due to a legitimate cause accepted by FTA

Where these conditions are met, taxable person will not be required to account for excise tax on deficient or missing goods.

Where goods require destruction, such destruction must not occur until permission obtained from FTA because FTA may want to inspect the goods. Also, the destruction request to FTA should include approval from relevant authority i.e. customs or municipality

FTA has also allocated a dedicated email id deficiencyandshortage@tax.gov.ae to provide any additional information requested by FTA

Declaration through form EX203B must be submitted by the taxable person which owns the goods , following which it will be automatically sent to warehouse keeper of designated zone for approval. Both process of submission by taxable person and approval by warehouse keeper should be completed within 30days time period.

FTA will accept below reasons as legitimate cause for deficiency or shortage:

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• Force majeure – i.e. circumstances beyond control such as fire, theft etc.

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• Natural wastage and shortage – i.e. unintentional spoiling, unfit for consumption, deficiency caused by storage conditions

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• Wastage or shortage in course of production – where wastage is within expected allowable threshold

Proper supporting documentation relating to the legitimate cause should also be included such as police report, insurance claim report, records of expiry dates, inventory reports etc.

FTA will respond to the declaration request within 30 days and will determine whether cause is legitimate and whether any inspection required.

Please note that this memo is for information purposes only and should not be construed as an advice. It does not necessarily cover every aspect of the
topics with which it deals. You should not act upon the contents of this alert without receiving formal advice on your particular circumstances.

If you would like to discuss Tax & VAT services, please drop us an email at info@premier-brains.com or call us at + 971 4 3542959.

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