EXTP010

The New Excise Tax Public Clarification on

Designated Zones
*effective from 1st April 2023

Date : 21st March 2023

Time : 10:00 – 11:00 AM

By, ITC Accounting & Tax Consultancy

ITC Accounting & Tax Consultancy | Offices - Abu Dhabi and Dubai | Phone :+971 523205486 | www.itc-tax.com | The New Excise Tax Public Clarification on Designated Zones | 21 March 2023.
 ITC ACCOUNTING AND TAX CONSULTANCY (ITC) is one of the top and most reliable
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ITC Accounting & Tax Consultancy | Offices - Abu Dhabi and Dubai | Phone :+971 523205486 | www.itc-tax.com | The New Excise Tax Public Clarification on Designated Zones | 21 March 2023.
 Speakers

Ahmed Sharafeldin Hozaifa Abouheba

Tax Partner Senior Tax Manager

ITC Accounting & Tax Consultancy | Offices - Abu Dhabi and Dubai | Phone :+971 523205486 | www.itc-tax.com | The New Excise Tax Public Clarification on Designated Zones | 21 March 2023.
 Topic of Contents
01 Introduction to EXTP010 replacing EXTP050
02 Summary of the New Announcement
03 Requirements
04 Consequences
05 Status of the Designated Zones
06 Quantities of Excise Goods in Designated Zones
07 Physical Security
08 Stock and Record Management System
09 Renewal of the Designated Zone’s Registration
10 Financial Guarantee

ITC Accounting & Tax Consultancy | Offices - Abu Dhabi and Dubai | Phone :+971 523205486 | www.itc-tax.com | The New Excise Tax Public Clarification on Designated Zones | 21 March 2023.
 01
Introduction – EXTP005
The FTA EXTP005 public clarification provides procedures for warehouse keepers
to renew the registration of their Excise Tax Designated Zones (DZs) in the United
Arab Emirates (UAE) every 12 months.
▪ The clarification also requires warehouse-keepers to review the expiration
dates of their designated zones and submit a renewal application.
▪ Compliant warehouse keepers may benefit from reduced requirements.
▪ This public clarification was published on August 31, 2022.

Summary – EXTP010 02
Any person who operates or intends to operate a designated zone for Excise Tax
purposes (also known as an excise), must register as a warehouse keeper and
register each of the designated zones that he supervises or intends to supervise.
Public Clarification EXTP010 replaces EXTP005 from April 1, 2023.

ITC Accounting & Tax Consultancy | Offices - Abu Dhabi and Dubai | Phone :+971 523205486 | www.itc-tax.com | The New Excise Tax Public Clarification on Designated Zones | 21 March 2023.
 03
Requirements
As part of the designated zone’s registration or renewal of registration request, the
warehouse keeper is required to:

01 Specify the types of excise goods that are or will be kept in the designated
zone.

02 Specify the quantity of excise goods which is or will be kept in the

designated zone.
Provide a financial guarantee in respect of the excise goods stored or to
03 be stored in the designated zone.

04 Provide proof that adequate physical security measures in respect of the

designated zone were implemented.

05 Provide proof that it maintains a stock and record management system

which tracks goods moving into and out of the designated zone as well as
transfers between designated zones.

ITC Accounting & Tax Consultancy | Offices - Abu Dhabi and Dubai | Phone :+971 523205486 | www.itc-tax.com | The New Excise Tax Public Clarification on Designated Zones | 21 March 2023.
 04
Consequences
Failure to meet these requirements may result in the rejection of a new
01 application or suspension of the registration of a designated zone, i.e.
suspension of all imports of excise goods as well as the production of goods in
the designated zone.

02 The designated zone’s registration is valid for 12 months and must be renewed
before the expiry of this period.

If the warehouse keeper fails to renew the designated zone’s registration before
03 the end of the 12-month period, the designated zone registration status will
become “suspended” for 20 business days and then “expired”.

04 If the warehouse keeper is requested to provide a financial guarantee or is

requested to provide an updated financial guarantee, this financial guarantee
should be provided within 40 business days

05 Failure to do so within the prescribed time limit will result in either rejection of
the application for registration or suspension/expiry of a designated zone
registration.

ITC Accounting & Tax Consultancy | Offices - Abu Dhabi and Dubai | Phone :+971 523205486 | www.itc-tax.com | The New Excise Tax Public Clarification on Designated Zones | 21 March 2023.
 05
Status of the Designated Zone

The registration of a designated zone can

become “suspended” or “expired” if the
requirements, as clarified below, for a designated
zone are not complied with or if the renewal
application is not submitted on time or not
submitted at all.

ITC Accounting & Tax Consultancy | Offices - Abu Dhabi and Dubai | Phone :+971 523205486 | www.itc-tax.com | The New Excise Tax Public Clarification on Designated Zones | 21 March 2023.
 05
Status of the Designated Zone
During the suspension period following shall
apply :

All imports of excise goods into the designated

01 zone shall be suspended.

All production of excise goods within the

02 designated zone shall be suspended.

All transfers from other designated zones shall be

03 suspended.

Following the end of a suspension period, the

designated zone registration can expire and all
excise goods in the designated zone will then be
considered to be released for consumption, and
Excise Tax should be accounted for in respect of
these goods.
ITC Accounting & Tax Consultancy | Offices - Abu Dhabi and Dubai | Phone :+971 523205486 | www.itc-tax.com | The New Excise Tax Public Clarification on Designated Zones | 21 March 2023.
 06
Quantity of Excise Goods in a Designated Zone
At the time of registering a designated zone, the applicant must provide the FTA with the
average month-end stock of the relevant excise goods that will be in the designated zone over
a 12-month period, based on the following:

Monitor the Average Month-end Stock

Average Month-end Stock Following the approval of the application to

register or renew a designated zone, the

01
If the applicant is already in business and has a warehouse keeper must monitor the average
warehouse in which excise goods are stored, month-end stock of excise goods stored in the
the applicant is required to determine the designated zone for 6 months following such as
average month-end stock of the relevant excise Registration and renewal.
goods based on the actual month-end stock of
each product of excise goods held in the 12
months preceding the date of the application.

Forecast of Month-end Stock

If the applicant is planning to start operating
or managing a warehouse and does not have
the quantities data to determine the actual
If 6-Month Stock more than 20%
month-end stock, the applicant is required to
forecast the expected month-end stock per
product of excise good to be held for each of
02 The warehouse keeper is required to notify
the FTA if the average month-end stock over
the 6- month period increased by more than
the coming 12 months. 20% of the originally reported quantity of
excise goods in the designated zone at the
time of the designated zone’s registration or
renewal as the case may be.
ITC Accounting & Tax Consultancy | Offices - Abu Dhabi and Dubai | Phone :+971 523205486 | www.itc-tax.com | The New Excise Tax Public Clarification on Designated Zones | 21 March 2023.
 07
Physical Security

Physical security is one of the most important

factors that will be considered by the FTA in its
decision to grant an approval to a warehouse
keeper to supervise a designated zone.

As part of the review of the registration or renewal

application, each designated zone site may be
inspected to ensure that adequate and stringent
security measures are put in place to control,
monitor, and safeguard the excise goods within the
designated zone that have not been subject to
Excise Tax.

ITC Accounting & Tax Consultancy | Offices - Abu Dhabi and Dubai | Phone :+971 523205486 | www.itc-tax.com | The New Excise Tax Public Clarification on Designated Zones | 21 March 2023.
 07
The applicant is required to provide sufficient evidence to
prove which of the following physical security criteria are met:

The physical site has sufficient space to store at least the average month-end holding
01 stock reflected in the registration form.

The premises allow for excise goods to be stored in separate identifiable locations that are
02 clearly marked.

The entrances and external doors of the premises are of solid material and fitted with
03 appropriate locking systems such as keypad code locks or electronic locks. If separate
freight doors are constructed, all access through the freight doors are monitored with
CCTV cameras and/or security personnel.

04 Windows are fitted with barriers to restrict access and removal of the excise goods.

Alarms or anti-theft or anti-intrusion systems are configured to detect unauthorized

05 access outside business hours. These systems are connected to a security monitoring point
such as a security office on the site.

ITC Accounting & Tax Consultancy | Offices - Abu Dhabi and Dubai | Phone :+971 523205486 | www.itc-tax.com | The New Excise Tax Public Clarification on Designated Zones | 21 March 2023.
 08
Stock and Record Management System
The warehouse keeper must implement a stock and record management system, ideally an accounting and
inventory management system that provides a clear audit trail of all excise goods entering and exiting the
designated zone or area intended to be registered as a designated zone. The system must be sufficient to
identify the following :

Stock Levels Value & Quantity Transferred to DZ

The stock levels in the designated zone The value and quantity of excise goods
at any given time transferred to another designated zone,
including details of that designated
zone.

Value & Quantity Entering Value & Quantity for Export

The value and quantity of excise goods The value and quantity of excise goods
entering the designated zone. transferred from the designated zone
for export.

Value & Quantity Leaving Value & Quantity Produced

The value and quantity of excise goods The value and quantity of excise goods
leaving the designated zone and produced within the designated zone.
released for consumption.
ITC Accounting & Tax Consultancy | Offices - Abu Dhabi and Dubai | Phone :+971 523205486 | www.itc-tax.com | The New Excise Tax Public Clarification on Designated Zones | 21 March 2023.
 09
Renewal of the Designated Zone’s Registration
Warehouse keepers can register a designated zone for a period of 12 months. This means that
every 12 months, the warehouse keeper must apply to renew the registration of the relevant
01 designated zone.

The renewal form will be available on the EmaraTax portal to be completed and submitted at
02 least 20 business days before the date on which the designated zone’s registration period
expires.

03 If the warehouse keeper fails to complete and submit the relevant renewal application within
this period, the designated zone’s registration status will become “suspended” for 20 business
days and the suspension implications as outlined above will apply

04 If the warehouse keeper still fails to complete and submit the relevant renewal application
within the suspension period, the designated zone will expire.

If the warehouse keeper intends to operate the expired designated zone, the warehouse
05 keeper will be required to submit a new application to register the designated zone that
expired due to late renewal.
ITC Accounting & Tax Consultancy | Offices - Abu Dhabi and Dubai | Phone :+971 523205486 | www.itc-tax.com | The New Excise Tax Public Clarification on Designated Zones | 21 March 2023.
 10
Financial Guarantee
Upon review and approval of the submitted information and documentary evidence included within a
first application for registration, the FTA will notify the applicant of the amount required as a financial
guarantee in respect of each area intended to be registered as a designated zone.

01 02 03 04 05

Financial Rejection Adjustment Timelines Suspension

Guarantee

The applicant has If the applicant fails The required The warehouse Following the end of this
suspension period, if no
40 business days to to provide the financial guarantee keeper will need to
updated financial
provide the financial guarantee may be adjusted submit the guarantee was
financial guarantee, within 40 business after registration or updated financial submitted, the
which is required to days, the renewal of a guarantee within designated zone
registration will expire
be renewed every registration registration of the 40 business days in
and all excise goods in
12 months, subject application will be designated zone order to maintain the designated zone will
to a successful rejected. the designated be considered to be
renewal of the zone’s registration released for
consumption, and
registration of the status.
Excise Tax should be
designated zone. accounted for in respect
of these goods.

ITC Accounting & Tax Consultancy | Offices - Abu Dhabi and Dubai | Phone :+971 523205486 | www.itc-tax.com | The New Excise Tax Public Clarification on Designated Zones | 21 March 2023.
 Q&A
ITC Accounting & Tax Consultancy | Offices - Abu Dhabi and Dubai | Phone :+971 523205486 | www.itc-tax.com | The New Excise Tax Public Clarification on Designated Zones | 21 March 2023.
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ITC Accounting & Tax Consultancy | Offices - Abu Dhabi and Dubai | Phone :+971 523205486 | www.itc-tax.com | The New Excise Tax Public Clarification on Designated Zones | 21 March 2023.