Under the GCC Unified Excise Tax Agreement, tax on excise goods does not become due the moment they are produced or imported; goods may instead be kept under a "tax suspension arrangement" inside a licensed tax warehouse until they are actually released for consumption, at which point the tax becomes due and must be paid within 15 days of the end of the month in which it fell due.
What Is the Tax Suspension Arrangement?
Article 1 of the Agreement defines the "tax suspension arrangement" as the arrangement under which the liability for tax on locally produced or imported excise goods is suspended. This takes place inside a "tax warehouse", the place where a "licensed person" is permitted to produce, process, hold, store or receive excise goods under this suspension arrangement.
When Does the Tax Actually Become Due?
Article 4 provides that the tax becomes due on the date the excise goods are released for consumption, and goods are treated as released for consumption in cases including: their production outside the suspension arrangement; their release from that arrangement; their possession outside it without the due tax having been paid; their import other than under a suspension arrangement; or their loss or destruction inside the suspension arrangement without the licensed person proving this was due to circumstances beyond their control.
Remaining Under Suspension While Moving Between States
Under Article 5, goods remain under a tax suspension arrangement while being transported from one tax warehouse to another within the same member state, or to a tax warehouse in another member state, or to the point of exit from GCC territory for export or re-export, or when imported directly into a tax warehouse in a member state.
Place of Taxation and the First Point of Entry
Article 8 provides that tax on imported excise goods is imposed in the state of the "first point of entry" — the first customs point at which the goods enter GCC territory — unless the goods are under a tax suspension arrangement, while tax on locally produced goods is imposed in the member state where they are actually released for consumption.
Refund on Export
Article 9 allows a refund of tax paid on excise goods that were released for consumption in a member state if they are subsequently exported or re-exported for business purposes outside GCC territory, and likewise if they are used in producing other excise goods that are themselves subject to tax.
Filing, Payment Deadlines, and Record-Keeping
Article 15 provides that each member state sets its own tax period or periods, provided no period is shorter than one month or longer than one year, while Article 16 requires the person liable to file a return to pay the tax due for each calendar month within 15 days of the end of that month. Article 14 also requires accounting records and books supporting the movement of excise goods to be kept for at least 5 years from the end of the financial year in which the transaction occurred, unless a member state's own legislation requires a longer retention period.
Legal References
- GCC Unified Excise Tax Agreement (annexed to Bahrain Law No. (39) of 2017) — Article (1): Definitions
- GCC Unified Excise Tax Agreement — Article (4): Tax Due Date
- GCC Unified Excise Tax Agreement — Article (5): Tax Suspension
- GCC Unified Excise Tax Agreement — Article (8): Place of Taxation and Collection Mechanism
- GCC Unified Excise Tax Agreement — Article (9): Tax Refund
- GCC Unified Excise Tax Agreement — Articles (14), (15) and (16): Record-Keeping, Tax Return, and Tax Payment
For questions about your specific situation, you can ask the Tax & Legislation Helper for your country on Helpers, or consult a licensed chartered accountant.