Excise Tax

What is Excise Tax?

Excise Tax is a consumption tax applied to specific goods typically deemed harmful to human health and the environment. Excise Tax is applied at a specified rate upon importation or local production of Excise goods

What is a carbonated drink?

Carbonated drinks refer to carbonated water with added sugar or other sweeteners or flavors. This will also include any concentrates, powder, gel, or extracts intended to be made into an aerated beverage.

In general, Excise Tax purposes’ carbonated drinks shall mean any aerated beverage except for unflavored aerated water.

As for energy drinks and drinks containing alcohol, it is not considered carbonated drinks, even if it is aerated.

For excise tax purposes, any drinks that fall under energy drinks/carbonated drinks will not be considered carbonated drinks.

What is an energy drink?

Energy drinks include any beverages which are marketed or sold as energy drinks and contain stimulant substances that provide mental and physical stimulation. Such ingredients can include caffeine, taurine, ginseng, and guarana, but could also include other ingredients that affect similar or identical materials. This will also include any concentrates, powder, gel, or extracts intended to be made into an energy beverage. Coffee and tea do not fall within the definition of energy drinks and will not be subject to Excise Tax.

Any drink that falls under the definition of Carbonated drink and Energy drink at the same time will be considered for Excise Tax as an Energy drink.

What if the same drink falls under the definition of Carbonated and Energy drink?

Moreover, energy drinks and carbonated drinks containing alcohol will not be deemed as energy or carbonated drinks, even if such beverages are aerated or containing stimulant substances.

What is a tobacco product?

Tobacco and tobacco derivatives include all items listed within Chapter 24 of the Unified Customs Tariff for GCC States.

Those products include:

  • Cigars
  • Cigarettes
  • Cigarillos
  • Water pipe tobacco
  • Other tobacco products

Who will pay Excise Tax?

Persons liable to pay Excise Tax include local producers, importers, and persons intending to operate tax warehouses. However, the cost of Excise Tax is expected to be passed on and ultimately be borne by the final consumer.

When is Excise Tax due?

Excise Tax will be due upon release of Excise goods for consumption. This includes, but is not limited to, the following:

  • Production of Excise goods (outside a tax suspension arrangement)
  • Import of Excise goods (outside a tax suspension arrangement)
  • Release of Excise goods (from a tax suspension arrangement)

When was the Excise Tax applied?

Excise Tax was first applied on 1 January 2019.

Why is Excise Tax being applied?

Excise Tax is a part of a broader regional agreement to address long-term socio-economic objectives for society’s benefit. Excise Tax is typically viewed as a way to address health objectives as it may persuade consumers to make healthier lifestyle choices.

Which goods are subject to Excise Tax? What is the rate of Excise Tax?

The following goods will be subject to Excise Tax at the respective tax rates:

  • Tobacco products – 100% tax rate
  • Carbonated drinks – 50% tax rate
  • Energy drinks – 100% tax rate

Who will be exempted from the Excise Tax?

There will be a few exemptions, and these may include personal belongings accompanying travelers and other exemptions based on international agreements

What is the validity of the Excise Tax Warehouse License?

The Excise Tax warehouse license is valid for one year only. Renewal of the ET warehouse license would require reapplying for the license every year.

If I pay Excise Tax at imports, should I pay it again and file Excise Tax return?

No, businesses that operate in trade activities (importing for selling) should be paying the excise tax only upon releasing goods for consumption.

Therefore, the goods are not subject to Excise Tax upon selling after being imported, and the tax has been paid. Businesses shall only pay Excise Tax on the release of goods for consumption. After import, goods are released for consumption and, therefore, not liable for Excise Tax. If you have a tax warehouse license, you have to follow the procedures related to tax warehouses.

What are the procedures to obtain a Tax Warehouse License?

To obtain a Tax Warehouse License, the following is required:

The tax applicant must first complete the registration process and become a taxable person for Excise Tax with GTA.

After this, the taxable person must then submit a new warehouse application for each excise warehouse needed, proving that the warehouse is either for produced or stored goods liable to excise tax.

Should I pay any fees to get a Tax Warehouse License?

The GTA has the right to collect an annual fee on the issuance and renewal of warehouse License.

How is the Financial Guarantee calculated?

The calculation of the Financial Guarantee and its submission to the GTA as per the procedures are stated in the decree issued by GTA.

What should the taxable business do if they are required to pay Excise tax?

Businesses will be required to register for Excise Tax by submitting an Excise Tax Registration application through the Dhareeba portal. After registration, businesses can pay ET either as a producer or as an importer or as Warehouse Keeper.

What are the procedures to prove the damage or loss of Excise Goods under tax suspension arrangement?

The taxable person should first assess the damage incident according to the excise tax law and its Executive Regulation and the allowable adjustment cases.

After the settleable loss or damage has happened, the taxable person should use a form ‘Excise Liable Goods Damage or Loss Notification’ on the Dhareeba portal and notify GTA of this and refer to the loss or damage has happened in the warehouse or in during transport and submit the documents the proof of the need for reduction in the inventory of excise liable goods.

These documents include, but not limited to, the following:

– Evidentiary documents issued by official bodies, such as the police report,

– Insurance company report, if present,

– Other documents proving damage or loss as a result of an accidental action or a force majeure

– Transport approval and receipt, if applicable.

How will businesses file excise Tax return?

Businesses will file their Excise Tax return through the Dhareeba tax-portal.

Should I mention the amount of Excise Tax in my invoices?

No, Business liable to pay Tax is not required to declare the amount of Excise Tax on the invoice, but the price (including the Excise Tax), quantity, and type of goods (description of goods) must be included.

Who will be eligible for Tax Warehouse?

All businesses registered for excise tax can ask for a warehouse license if they conduct actual excise activities in the State of Qatar.

Should I keep records and invoices related to Excise Tax? What is the period of time and for how many years?

Yes, business is required to keep regular and independent books and records, including supporting documents, to verify the Excise Tax calculation and payment accuracy. All documents shall be kept for five years by the business.

What are the Excise Tax compliance requirements for businesses?

Businesses liable to pay the Excise Tax will need to register for Excise Tax purposes, keep accounting books and records, file tax returns, and pay the tax due quarterly. The Excise Tax legislation will provide a list of compliance requirements. You may find further information in the Excise Tax Taxable Person Guide.

What if Excise goods are unsold for a period after being released for consumption, can the Excise Tax be due for payment at the date of sale of the Excise goods?

Excise Tax is due upon the release of Excise goods for consumption as stipulated above, regardless of whether the Excise goods have been sold to the consumer or not. The date the Excise Tax is due is not relevant to the moment of sale of the Excise goods.

What does release for consumption mean?

The Excise goods are deemed released for consumption upon the occurrence of any of the following:

  • Production of Excise goods (outside a tax suspension arrangement);
  • Import of Excise goods (outside a tax suspension arrangement);
  • Release of Excise goods (tax suspension arrangement);
  • Holding of Excise goods (outside a tax suspension arrangement), on which the Excise Tax due was not paid in the State of Qatar;
  • Loss or damage of Excise goods while in a tax suspension arrangement, and the License holder was unable to demonstrate that such loss or damage was resulted from causes beyond their control.

For further details on the application of release for consumption please refer to the Excise Tax Guidebook.

What are the main features of Excise Tax?

Excise Tax is a consumption tax and is levied on specific goods only.

It is a single-phased tax levied once at import or the production stage within the country.

Businesses collect it on behalf of the General Tax Authority.

Excise tax is filed on production based on a self-assessment, which means businesses file their return regularly to GTA.

The Customs Authority levies excise Tax at importation via the import declaration issued by the importer on behalf of the GTA.

As a consumption tax, Excise Tax is ultimately borne by the final consumers, but collected earlier in the supply chain. Importers, manufacturers, and in some instances, other agents in the supply chain are liable to register for Excise Tax, submit periodical returns, pay the Excise Tax due to the General Tax Authority or General Customs Authority (depending on the case), and maintain specific Excise Tax records.

Will Excise Tax be payable by travelers entering Qatar?

Travelers entering Qatar with Excise goods for non-business purposes will not be liable to pay Excise Tax on such goods; provided the goods remain within the threshold quantity for exemption determined by the Customs Authority for Customs Duty purposes. Where the Excise goods quantity exceeds the threshold of the exemption for Customs Duty purposes, then Excise Tax will be due on the Excise goods exceeding the threshold.

What are the cases of Excise Tax refund?

The Authority may refund the Excise Tax initially paid by the taxable persons in one of the following cases:

  • Export or re-export of Excise goods already released for consumption in the State of Qatar;
  • Use of Excise goods already released for consumption in the State of Qatar to produce other Excise goods;
  • Movement of Excise goods already released for consumption in the State of Qatar to another GCC Member State implementing Excise Tax.

How do I calculate the Excise Tax?

Excise Tax is calculated as a percentage of the tax value of the goods. The Excise Tax value of the goods (i.e., the ‘tax base’) shall be the higher of:

 

  • The standard price as listed in a schedule issued by Ministerial decision or a minimum value determined by the GTA and issued on its website; or
  • The Retail Sales Price (RSP) declared by the producer or importer or warehouse keeper of such Excise goods after deducting any Excise Tax amount included in that price. To deduct the Excise Tax included in the retail sales price (if any); the following should be applied:
  • For Excise goods subject to 50% – multiply the RSP by 66.67%;
  • For Excise goods subject to 100% – multiply the RSP by 50%.

The Excise Tax value includes any other taxes or duties charged on those goods, except for VAT after its introduction in the State of Qatar.

Can I get Excise Tax refund if I am not registered for Excise Tax purpose?

Only a taxable person may apply for an Excise Tax refund request within 30 days from the corresponding tax period of the refund case.

Will Excise Tax affect prices/margins?

Excise Tax is levied at the production stage, at import, or release from a tax suspension arrangement and is not refunded; businesses will therefore need to make commercial decisions as to how they will adjust their pricing structures to account for it.

What does the RSP mean?

The retail sales price (RSP) is the price declared by the producer or importer of the Excise goods after deducting any tax amount included in that price.

How will Excise Tax impact my business and what are the expected Excise Tax compliance requirements?

If you are engaged in importing, manufacturing, trading, storing, or transporting Excise goods, then the new Excise Tax system will significantly impact your business. The primary compliance requirements are expected to include:

  • Registering with the General Tax Authority, there is no threshold.
  • Ensuring the appropriate resources and systems are in place to effectively managing Excise Tax to reduce the risk of non-compliance.
  • Keeping Excise Tax records for a specific duration, on paper or electronically; records must be accurate, complete, and readable.
  • Submitting periodical Excise Tax returns.
  • Complying with the inventory and movement control system, which may entail keeping and submitting additional documents related to the physical movement of Excise goods, particularly in the case of movements under Excise Tax suspension.

Keeping customs and transport documents as relevant to the movement of Excise goods, especially concerning transactions subject to refunds and exemptions or performed under Excise Tax Suspension

What is the Excise Tax procedure in case of loss or damage of excise goods?

Excise goods that are lost or damaged in a tax warehouse may be relieved from the payment of Excise Tax in certain circumstances and subject to meeting certain conditions to substantiate that the loss or damage was due to events beyond the taxable person’s control. If the latter cannot be substantiated, then the Excise goods will be deemed released for consumption and subject to Excise Tax.

What if I make errors while following the procedures of excise tax?

It is expected that there will be a penalty regime applicable in cases of errors made, and this is why it will be critical to have the right systems and procedures in place to limit your exposure. Errors that affect the amount of Excise Tax due will be subject to penalty. Examples of errors include late submission and payment of Excise Tax due, not charging Excise Tax correctly, and failure to obtain/retain valid documentation to support your activities.

What are the Excise Tax suspension arrangements?

Excise goods are considered to be in a tax suspension arrangement in one of the following cases:

  • Production of Excise goods or the processing, holding, storage, or receipt of locally produced Excise goods in a tax warehouse;
  • Import of Excise goods into a tax warehouse;
  • Movement of Excise goods under tax suspension in any of the following cases:
    • From a tax warehouse to another tax warehouse within the State of Qatar;
    • From a tax warehouse to another tax warehouse in another Member State implementing Excise Tax;
    • From a tax warehouse in another Member State implementing Excise Tax to another tax warehouse in the State of Qatar;
    • From an excise tax warehouse to the point of exit of Excise goods from the GCC territory for export or re-export following the provisions of the Customs Law;
      Import of Excise goods under customs duty suspension under the provisions of the Customs law.

What is a tax warehouse?

A tax warehouse is a location where an authorized person is permitted to store or manufacture Excise goods under an Excise Tax suspension arrangement. Such goods will be taxable upon their release from the tax warehouse.

Who will be required to register for Excise Tax purposes?

The following taxable persons will be required to register for Excise Tax:

  • Producers of Excise goods.
  • Importers of Excise goods.
  • Tax warehouse keepers responsible for Excise goods.