Issue
All Warehouse Keepers (and persons intending to register as Warehouse Keepers) are required to provide a financial guarantee for each Designated Zone the Warehouse Keeper is responsible for. The amount of the required guarantee is determined by the Federal Tax Authority ("FTA").
The FTA wants to acknowledge Warehouse Keepers with good governance of their tax affairs by reducing the amount of the required financial guarantee based on the Warehouse Keeper's and the Taxable Person's compliance history.
This Public Clarification provides guidance on how financial guarantees in respect of Excise Tax Designated Zones are calculated. This Public Clarification takes effect from 1 September 2022.
Summary
At the time Excise Tax was introduced in 2017, the FTA did not have sufficient compliance history to determine a compliance risk-based financial guarantee amount for Excise Tax Designated Zones.
In the past five years, compliance history has been monitored and, in line with international best practice, from 1 September 2022, financial guarantees will be determined using a different risk-based approach which considers certain variables. This approach benefits compliant Warehouse Keepers, as a good compliance history results in a lower financial guarantee amount.
The amount of the financial guarantee in respect of each Excise Tax Designated Zone shall be calculated from 1 September 2022, as follows:
Step 1: Calculate the Guarantee Base based on the Excise Tax due on the average month-end stock over a period of twelve months.
Step 2: The FTA will determine the applicable and appropriate financial guarantee percentage based on multiple factors, including the compliance history of the relevant taxable person and the Warehouse Keeper, as well as the financial situation of the person required to provide the financial guarantee.
Step 3: The rate determined in Step 2 will be applied to the Guarantee Base calculated in Step 1 to calculate the preliminary financial guarantee amount.
Step 4: The FTA will further determine the required financial guarantee amount in respect of the specific Designated Zone by adjusting the preliminary financial guarantee amount if either the minimum or the maximum threshold applies.