An excise tax audit in the UAE is a formal review conducted by the Federal Tax Authority (FTA) to ensure businesses dealing in excisable goods—such as tobacco, sugary drinks, and energy beverages—are correctly calculating, reporting, and paying excise tax within the legal framework. The audit can be announced or unannounced and may take place on business premises or at the FTA offices. The process involves examining business records, inspecting inventory, and verifying payments against regulatory requirements
Comprehensive Review of Excise Compliance
An excise tax audit helps businesses ensure they fully comply with UAE excise regulations by thoroughly reviewing their tax records, declarations, and reporting practices.
Verification of Excise Product Categories
Identify whether the goods manufactured, imported, or sold fall under excise-taxable categories such as tobacco, carbonated drinks, energy drinks, e-cigarettes, and sweetened beverages.
Assessment of Documentation Accuracy
Audit involves checking invoices, import documents, stock records, and tax returns to ensure all details match the requirements of the Federal Tax Authority (FTA).
Evaluation of Tax Calculations
Ensure excise tax calculations are accurate based on product type, quantity, and applicable tax rates.
Compliance Gap Identification
Highlight errors, reporting gaps, or missed liabilities that may lead to penalties and recommend corrective measures.
Preparation for FTA Inspections
Ensure your business is fully prepared and compliant for possible FTA audits or investigations.
Professional Audit Report
Receive a detailed audit report outlining discrepancies, recommended improvements, and necessary rectifications.
Understanding Excise Tax Rules
Guidance on excise tax laws, taxable products, applicable rates, and compliance obligations under UAE regulations.
Business Eligibility Assessment
Evaluate whether your business activities fall within the scope of excise taxation, ensuring clarity and preventing unintended non-compliance.
Cost & Impact Analysis
Understand how excise tax will affect pricing, supply chain operations, and profit margins.
Record-Keeping Guidance
Learn how to maintain proper documentation, stock records, and transaction logs required by the FTA.
Risk Identification & Mitigation
Identify compliance risks and receive solutions to minimize exposure to penalties.
Tailored Advisory for Your Business
Receive customized excise tax strategies suitable for your industry and operations.
Determining Tax Registration Requirement
Identify whether your business must register based on activities like importing, producing, or storing excisable goods.
Preparation of Required Documents
Gather essential documents including trade license, product details, financial records, and warehouse information needed for registration.
FTA Portal Registration
Complete the excise tax registration through the Federal Tax Authority’s online portal.
Verification of Excisable Goods
Ensure accurate classification of goods as excisable to avoid incorrect filing or penalties.
TIN & Excise Account Setup
Establish your excise tax account and receive your Tax Registration Number (TRN) for excise purposes.
Compliance Review Before Approval
Ensure all details are accurate and complete to avoid delays in the verification and approval process.
Preparation of Periodic Excise Tax Returns
Assist with timely submission of monthly or quarterly excise tax returns as required by the FTA.
Accurate Calculation of Payable Tax
Ensure correct computation of excise tax based on production, import, or stock release quantities.
Stock Movement Reconciliation
Match stock records with tax declarations to ensure accuracy and avoid discrepancies.
Verification of Imported & Produced Goods
Confirm quantities and product classifications to ensure correct tax filing.
Submission Through FTA Portal
File excise tax returns through the online system on time to avoid penalties.
Record Maintenance for Compliance
Ensure proper documentation and return filing records are maintained for future FTA audits.
Ongoing Advisory
Receive continuous guidance on changes in excise tax laws and compliance requirements.
Excise Tax Audit: What to Expect
Audit Scope: The FTA can select any registered or obliged business for an audit. Auditors will verify transactions, inventory, excise goods movement, and payment reconciliations. Physical checks and interviews with responsible staff (e.g., accounting, logistics, warehouse) may be conducted.
Required Documents:
- Excise tax registration certificate and returns
- General ledger and transaction records for excisable goods
- Inventory reports, warehouse registration, and movement logs
- Trade invoices and bills of lading
- Customs clearances for imported goods
- Excise price lists and declarations filed via FTA portal
- Internal correspondence and contracts linked to excisable products.
Audit Notification: While surprise audits are possible, businesses typically receive notice detailing the audit’s scope, schedule, and required documents, with instructions to provide full cooperation to auditors.
Penalties and Compliance
Failure to properly maintain excise records, incorrectly declare taxable goods, or pay excise tax on time can lead to penalties ranging from AED 10,000 for first-time administrative errors to much higher fines for repeat or deliberate non-compliance. Errors in filing, late registration, or non-cooperation can attract further penalties and even re-audits.
Best Practices
- Keep detailed and accurate records for at least five years
- Regularly reconcile excise records and inventory counts
- Promptly respond to audit notices and cooperate fully with auditors
- Consult qualified tax advisors to ensure readiness, compliance, and risk mitigation in the event of an audit.
Being well-prepared for an excise tax audit ensures continued compliance with UAE tax laws, protects against heavy penalties, and keeps business operations running smoothly.
