In the Excise Tax Law, what major changes have been made?

INTRODUCTION 

Excise taxes are an integral part of government consumption taxes in the United States and globally. Excise taxes on specific goods or services are usually levied on tobacco, alcohol, and fuel. Contrary to their reputation, excise taxes make up a relatively small portion of the total taxes paid in the United States. Until the early 20th century, excise taxes accounted for a large portion of all federal taxes paid, but today they contribute only 2.9% of federal taxes. Earnings = earnings.

IRS

The Internal Revenue Service  IRS defines an excise tax as “applied to the sale of specific goods or services or certain uses”. By definition, these taxes differ from broad-based consumption taxes by their selectivity. This limited basis must be justified by the only costs or considerations associated with the activity being taxed; otherwise, it will just be a discretionary tax. As states fared better during the COVID-19 pandemic than initially feared, state and federal governments must decide how best to maintain tax revenue and day-to-day funding spending. Increase without adding a new burden to a struggling economy. 

An excise tax could be an attractive proposition for some lawmakers, as an excise tax could be a way for the government to generate new revenue. Since they are often taxed narrowly (for a particular product component or type of transaction) and for products that could be considered harmful, an increase in excise tax can be a source of income. Politically attractive additional revenue.

IN ADDITION

In addition, because excise taxes are often targeted at a specific product, they pose less risk to the overall economy than raising general taxes such as general income or sales taxes. However, legislators should exercise caution. Since these taxes are very narrow, increasing excise taxes can be detrimental to specific industries and certain types of consumers. Their design also makes them less sustainable income tools as revenue tends to be more, and the tax burden tends to be regressive.

A BRIEF HISTORY OF EXCISE TAXES

The history of the excise tax goes back at least 5,000 years. The first recorded tax was in ancient Egypt around 3000 BC, where, among other things, an excise tax was on oil and beer.

Thousands of years later, in a famous book which is names ‘An Inquiry into the Nature and Causes of the Wealth of Nations, by Adam Smith, a favourable mention of the excise tax:

“Sugar, rum, and tobacco, which are non-essentials to life, [have] become near-universal consumption, and are therefore exceedingly taxable.”

This quote can be read as a suggestion to use excise taxes to increase overall sales, and Adam Smith is often invoked to make this exact point, but it is more complex. The book was written when accounting and measurability were crucial, a quality that these products were shared with other tax bases. For example, the British Empire relied on property taxes, stamp duties, customs duties and excise taxes, not income taxes, general sales taxes, or many other taxes we know today. Furthermore, Smith points out that these products are ideal for taxation because they are nearly universally consumed. Today, not only are sugar, rum, and tobacco not widely consumed, but we also have taxes more tailored to general consumption:

SPECIFICALLY SALES TAX IN GENERAL.

The first excise tax imposed in the United States was levied on whiskey production in 1791. The tax fell out of favour, caused the famous peasant rebellion of western Pennsylvania, and remained only in existence. Until 1802. During the Republic’s early years, excise taxes were seen as revenue instruments associated with war and economic depression. As recently as 1934, during the Great Depression, excise tax revenue accounted for nearly half of all federal government tax revenue and generated three times as much personal income tax. Today, there are federal excise taxes on fuel, tobacco, and alcohol, along with other goods, services, and activities, and various state excise taxes. , although their contribution to total federal revenue has been greatly reduced. 

Amendment to Federal Executive Order No (7) of 2017 on Special Consumption Tax Five years after the introduction of excise tax in the UAE, Federal Executive Order No. (19) of 2022 was issued to amend Federal Executive Order No. (7) of 2017 on Special Consumption Tax. Separate. These changes were also detailed in the Excise Tax Disclosure EXTP009 and came into effect on October 14, 2022.

WHAT ARE THE MAJOR AMENDMENTS TO THE EXCISE TAX ACT?

1. Exceptions to Registration – Article 6
2. Tax payment – Article 19
3. Term – Article 25

THE CHANGES ARE DETAILED BELOW:

1. REGISTRATION EXCEPTION

People importing excise goods for purposes other than commercial activities are exempt from registration without prejudice to the obligation to pay the relevant excise tax on such importation.

This exception relieves the person from the act of administrative registration and not the obligation to pay excise taxes or administrative penalties that may be imposed.

2. PAY THE AMOUNT RECEIVED AS EXCISE TAX

Any amount reflected as an excise tax on an invoice or collected from a customer as excise tax must be paid to the Competent Authority and should be treated in the same manner. As for the tax payable.

EXTP009 clarifies that this applies even to cases where excise has been levied on goods not subject to excise.

3.RESTRICTIONS 

A new provision has been introduced in the law, setting the maximum period within which the Agency can conduct a tax audit or issue a tax assessment. The general period to prevent an FTA from taking action, such as initiating an audit or issuing a tax assessment, is five years from the end of the relevant tax period.

 HOWEVER, IN THE FOLLOWING CASES, THE FTA MAY CONDUCT AN EXAMINATION OR ASSESS THE TAXPAYER AFTER THE EXPIRATION OF THE FIVE YEARS:

• If a tax audit has been notified to the taxable person before the expiration of the five years, provided that the audit is completed or an opinion is given within four years of the date of notification. Newspaper.

• If an audit or tax assessment involving a voluntary disclosure is filed in the fifth year from the end of the tax period, provided that the audit is completed or an assessment is made within one year from the date of submission of VD. A voluntary return cannot be filed after five years have passed from the end of the relevant tax period.

• In the event of tax evasion, the AFC may conduct a tax audit or issue a tax assessment within 15 years from the end of the tax period in which the tax evasion occurred.

• In the absence of tax registration, the FTA may conduct a tax audit or issue a tax assessment within 15 years from the date of the registration request.

FINAL WORDS

As the maximum time to amend previous returns is limited to 5 years, all excise businesses are encouraged to review their previous returns and transactions to ensure they are correct. Ensure compliance with the law. You should also make sure to accurately account for the excise tax billed to ensure that the tax due is paid to federal tax authorities.