GCC Excise Tax Agreement (2016)

Factual summary

The common framework agreed by the six GCC States for an excise tax on goods harmful to human health and the environment and on luxury goods, executed in Arabic on 27 November 2016. It sets when tax becomes due, tax suspension in Tax Warehouses, the taxable value (retail price or a standard price list, whichever is higher), where the tax is charged and when it is refunded, and minimum compliance rules: registration, five-year records, tax periods of one month to one year and monthly payment within 15 days. Each Member State applies it through its own Local Law.

What it means in practice Professional insight

Who: mainly governments and tax administrations; businesses deal with the UAE law that applies the tax. What to check: intra-GCC movements and refunds for goods taxed in another Member State, and the Agreement's price rule when reading the UAE Excise Price method.

Key provisions

• Art. 3 Tax is imposed on goods harmful to human health and to the environment and on luxury goods, under a list and tax rates determined — and modifiable — by the Ministerial Committee (the GCC Financial and Economic Cooperation Committee).
• Arts. 4, 5 Tax becomes due on release for consumption: production or possession outside a Tax Suspension Situation, release from suspension, import (unless in suspension), and loss or damage in suspension not shown to be beyond the Licensee's control. Tax is suspended on goods produced, processed, possessed, stored or received by a Licensee and on movements between Tax Warehouses, to an exit point for export, or on import to a Tax Warehouse.
• Art. 6 The taxable value of tobacco follows the Supreme Council's decision at its 36th session or later decisions; for other Excise Goods it is the retail sale price given by the importer or producer, or a standard price list periodically agreed by the GCC tax administrations, whichever is higher.
• Arts. 8, 9 Locally produced goods are taxed in the Member State where released for consumption and imported goods in the State of the First Point of Entry (unless in suspension); goods already taxed in one Member State and moved to another are taxed at that State's point of entry, and a refund may be claimed in the first State. Tax is also refunded on export or re-export for business purposes outside the GCC and on goods used to produce other taxable Excise Goods.
• Arts. 14–16 Persons Obliged to Pay Tax keep books, records and supporting documents for five years from the end of the fiscal year (or longer under local law); each Member State sets its tax periods, of not less than one month and not more than one year; a person required to file returns pays the Due Tax for each Gregorian month within 15 days from the end of the month.
• Art. 18 The Ministerial Committee determines the Excise Goods that must carry special marks/stamps and the rules for them across the GCC Territory.
• Art. 29 Adopted by the GCC Supreme Council and ratified by Member States, the Agreement comes into force from the deposit of the second Member State's ratification document with the GCC General Secretariat; each Member State issues a Local Law to implement it and stays outside its scope until that Local Law is effective. Executed in Arabic on 27/2/1438 H, corresponding to 27/11/2016.