EXTP011

Excise Tax Public Clarification

Natural Shortage of Excise Goods

Issue

Excise Goods are treated as released from a Designated Zone ('DZ') and entering into free circulation if they are found to be deficient, there is a shortage in their quantity within a DZ during transfer between DZ's, or whilst held in a suspension arrangement in accordance with the Customs Legislation.

However, Cabinet Decision No. 37 of 2017 on the Executive Regulation of the Federal Decree-Law No. 7 of 2017 on Excise Tax, and its amendments ('Executive Regulation') provides an exception to the general rule, whereby a shortage in the quantity of the Excise Goods that occurs due to the natural characteristics of such goods within a DZ is not considered a release from a DZ in certain situations.

FTA Decision No. 6 of 2025 on the Standards, Controls and Procedures for Dealing with Shortage Within the Designated Zone due to the Natural Characteristics of Excise Goods ('FTA Decision') set out the standards, controls and procedures for dealing with Natural Shortage within a DZ, effective from 1 July 2025.

This Public Clarification outlines the situations under which Natural Shortage will not be considered a release for consumption from a DZ, and it clarifies the controls and procedures for dealing with such shortage, effective from 1 July 2025.

Summary

From 1 July 2025, Excise Goods shall not be considered as 'released for consumption' where a Natural Shortage in the quantity of the Excise Goods occurs, provided the relevant conditions are fulfilled.

In line with the FTA Decision, the Warehouse Keeper or Taxable Person ('Relevant Person') storing/producing Excise Goods within a DZ may submit a request to Laboratories approved by the FTA ('Independent Competent Entity') to determine the percentage of Natural Shortage in Excise Goods, along with the required documents.

The Independent Competent Entity will review the request in accordance with the prescribed standards and controls set out in FTA Decision, and issue a report ('Report') that includes details of the Excise Goods as well as the permissible, expected or actual percentage of Natural Shortage for such Excise Goods. Such Report shall be valid for one year from its date of issuance.

The Relevant Person shall notify the FTA of the actual Natural Shortage by submitting a declaration on the EmaraTax platform.