FTA’s first Decision of 2021 on excise tax product pricing

210516 2 FTA's first Decision of 2021 on excise tax product pricing

The Federal Tax Authority (FTA) have issued its first Decision of 2021 on 28th April, 2021, on the Mechanism for Calculating the Average Retail Selling Price of Excise Goods in the Market. This Decision shall be implemented as of date of issuance.

A Taxable Person shall undertake the following procedures to calculate the Average Retail Selling Price of Excise Goods in the Market for the purposes of identifying the Designated Retail Selling Price as per the following sequence:

  1. Identify the different Retail Selling Prices of the Excise Good within the supply chains in which the Taxable Person is party to or participating in, which are charged by the retailer when the Good is sold to consumers during the 12-month period preceding the month in which the calculation of the Average Retail Selling Price is performed;
  2. Deduct the value of Value Added Tax and Excise Tax included within each Retail Selling Price identified in paragraph (a) of this Clause to calculate the tax-exclusive Retail Selling Price;
  3. Multiply the total number of units of the Excise Good sold at each Retail Selling Price identified in paragraph (b) of this Clause by the Retail Selling Price applicable on each of such Excise Goods, to determine the total revenues in the Market arising from sales of that Excise Good for the previous 12-month period;
  4. Divide the total revenues in the Market identified in paragraph (c) of this Clause by the total number of units of the Excise Good sold at all prices during the 12-month period preceding the month in which the calculation of the Average Retail Selling Price is performed;
  5. Multiply the figure resulting from paragraph (d) of this Clause by the Excise Tax rate applicable to the Excise Good to arrive at the notional Excise Tax due on the Excise Good;
  6. Add the figures resulting from paragraphs (d) and (e) of this Clause to arrive at the Average Retail Selling Price of the Excise Goods in the Market, excluding Value Added Tax.

The Decision further discuss under Article 2; Excise Goods Not Intended for Retail Sale in the State.

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