Is excise tax charged on goods held in a designated zone?

Article 15 – Designated Zones10 1. Excise Goods stored, preserved or processed in a Designated Zone or transferred between Designated Zones will be treated as not released for consumption pursuant to Article 12 of this Decision. 2. For the purposes of Article 13 of the Decree-Law, a “Designated Zone” is any of the following: a. a fenced free zone that meets the following conditions: 1) has security measures in place to restrict entry and exit of individuals and movement of Excise Goods to and from the fenced free zone according to the controls specified by the Authority, 2) is controlled and supervised by a customs department, and 3) a Warehouse Keeper has been appointed for the fenced free zone, b. any area specified by the Authority provided it meets the following conditions: 1) is a specific geographic area, 2) has security measures in place to restrict entry and exit of individuals and movement of Excise Goods to and from that area, according to controls 10 Amended by Cabinet Decision No. 108 of 2023. Cabinet Decision No. 37 of 2017 and its amendments – Unofficial translation 15 specified by the Authority, and 3) a Warehouse Keeper has been appointed for the area. 3. The Designated Zone shall be registered via an application submitted by the Warehouse Keeper to the Authority pursuant to the procedures specified by the Authority. 4. The Authority may request a financial guarantee upon registration of a Designated Zone or upon its registration renewal or amendment as specified by the Authority in this regard. 5. The Designated Zone will be treated as if it were within the State if it changes its operating mechanism or violates any of the conditions upon which it was specified as a Designated Zone. 6. Every Person appointed as a Warehouse Keeper must control and supervise the Designated Zone and the transfer of Excise Goods to another Designated Zone without release for consumption, in accordance with the following conditions: a. keep records of Excise Goods held in the Designated Zone at any time in accordance with Clause 9 of this Article, b. keep evidence of Excise Goods being intended for transfer to another Designated Zone without release for consumption in accordance with Clause 9 of this Article, and c. any such other records as the Authority may specify to be kept in respect of each Designated Zone supervised by the Warehouse Keeper. 7. The records referred to in paragraph (a) of Clause 6 of this Article may be kept by other Persons, provided the Warehouse Keeper remaining responsible for keeping such records. 8. Excise Goods that are imported into, received, produced, stored, preserved, processed or otherwise held in a Designated Zone will not be subject to Tax until those goods are released from the Designated Zone or are deemed to have been released for consumption under Article 12 of this Decision. 9. The Warehouse Keeper shall be required to retain documentary evidence as specified by the Authority and shall provide such evidence to the Authority on request, relating to the keeping and treatment of goods in a Designated Zone. The Cabinet Decision No. 37 of 2017 and its amendments – Unofficial translation 16 evidence retained should be sufficient to identify the following: a. the stock levels of the Designated Zone at any given time, b. the value and quantity of Excise Goods entering the Designated Zone, c. the value and quantity of Excise Goods leaving the Designated Zone and released for consumption, d. the value and quantity of Excise Goods transferred to another Designated Zone, including details of that Designated Zone, e. the value and quantity of Excise Goods transferred from the Designated Zone for Export, f. the value and quantity of Excise Goods produced within the Designated Zone, and g. the value and quantity of Excise Goods subject to deficiency or shortage and that which was or will be destroyed. 10. Excise Goods that are transferred from a Designated Zone to another Designated Zone in the State shall not be subject to Tax in the following cases: a. where the Excise Goods, or part thereof, are not released for consumption during the transfer, b. where the Excise Goods are not in any way used or altered during the transfer, or c. where the transfer is undertaken in accordance with the rules and controls as specified by the Authority. 11. For the purposes of Article 14 of the Decree-Law, a transfer of Excise Goods between Designated Zones within the State must be undertaken in accordance with the following procedures: a. the Warehouse Keeper responsible for the Designated Zone from which the Excise Goods are transferred must issue a document containing the following particulars: 1) the type, value and quantity of Excise Goods to be transferred, 2) the value of Due Tax in the event the Excise Goods were released for consumption in the course of the transfer to another Designated Zone, and Cabinet Decision No. 37 of 2017 and its amendments – Unofficial translation 17 3) the details of the Designated Zone to which the Excise Goods will be transferred and the Warehouse Keeper responsible for it. b. the Warehouse Keeper responsible for the Designated Zone to which the Excise Goods have been transferred must confirm receipt of the Excise Goods, and c. the Excise Goods must be accompanied with the document issued pursuant to paragraph (a) of this Clause when transferring these goods and submitted to the Authority upon request. 12. Excise Goods may be transferred between Designated Zones within the State or from a Designated Zone for Export purposes if the following conditions are met: a. the Warehouse Keeper of the Designated Zone from which the Excise Goods are transferred shall remain responsible for the Excise Goods until they are received by the Warehouse Keeper of the Designated Zone to which the Excise Goods are transferred or until they are exported, b. the Person responsible for transferring the Excise Goods must be either a Taxable Person or a Warehouse Keeper for any of the two zones, c. if the Excise Goods are transferred by a Taxable Person, a prior consent from the Warehouse Keeper to transfer these Excise Goods must be obtained, and the Warehouse Keeper may reject the request of the Taxable Person to transfer such goods, and d. the Warehouse Keeper must retain copies of all approvals granted to the Taxable Person to transfer the Excise Goods. Title Seven – Calculation of Due Tax

Article 13 – Designated Zone 1. A “Designated Zone” which fulfils the conditions specified in the Executive Regulation of this Decree-Law shall be treated as being outside the State for Tax purposes. 2. By way of exception to the provisions of clause 1 of this Article, the Executive Regulation of this Decree-Law shall specify the conditions under which the Business conducted within the Designated Zone shall be treated as being conducted in the State.

Article 15 – Designated Zones12 1. Excise Goods stored, preserved or processed in a Designated Zone or transferred between Designated Zones will be treated as not released for consumption pursuant to Article 12 of this Decision. 2. For the purposes of Article 13 of the Decree-Law, a “Designated Zone” is any of the following: a. a fenced free zone that meets the following conditions: 1) has security measures in place to restrict entry and exit of individuals and 12 Amended by Cabinet Decision No. 108 of 2023. Cabinet Decision No. 37 of 2017 and its amendments – As published by the Ministry of Finance 15 movement of Excise Goods to and from the fenced free zone according to the controls specified by the Authority, 2) is controlled and supervised by a customs department, and 3) a Warehouse Keeper has been appointed for the fenced free zone, b. any area specified by the Authority provided it meets the following conditions: 1) is a specific geographic area, 2) has security measures in place to restrict entry and exit of individuals and movement of Excise Goods to and from that area, according to controls specified by the Authority, and 3) a Warehouse Keeper has been appointed for the area. 3. The Designated Zone shall be registered via an application submitted by the Warehouse Keeper to the Authority pursuant to the procedures specified by the Authority. 4. The Authority may request a financial guarantee upon registration of a Designated Zone or upon its registration renewal or amendment as specified by the Authority in this regard. 5. The Designated Zone will be treated as if it were within the State if it changes its operating mechanism or violates any of the conditions upon which it was specified as a Designated Zone. 6. Every Person appointed as a Warehouse Keeper must control and supervise the Designated Zone and the transfer of Excise Goods to another Designated Zone without release for consumption, in accordance with the following conditions: a. keep records of Excise Goods held in the Designated Zone at any time in accordance with Clause 9 of this Article, b. keep evidence of Excise Goods being intended for transfer to another Designated Zone without release for consumption in accordance with Clause 9 of this Article, and c. any such other records as the Authority may specify to be kept in respect of each Designated Zone supervised by the Warehouse Keeper. 7. The records referred to in paragraph (a) of Clause 6 of this Article may be kept by Cabinet Decision No. 37 of 2017 and its amendments – As published by the Ministry of Finance 16 other Persons, provided the Warehouse Keeper remaining responsible for keeping such records. 8. Excise Goods that are imported into, received, produced, stored, preserved, processed or otherwise held in a Designated Zone will not be subject to Tax until those goods are released from the Designated Zone or are deemed to have been released for consumption under Article 12 of this Decision. 9. The Warehouse Keeper shall be required to retain documentary evidence as specified by the Authority and shall provide such evidence to the Authority on request, relating to the keeping and treatment of goods in a Designated Zone. The evidence retained should be sufficient to identify the following: a. the stock levels of the Designated Zone at any given time, b. the value and quantity of Excise Goods entering the Designated Zone, c. the value and quantity of Excise Goods leaving the Designated Zone and released for consumption, d. the value and quantity of Excise Goods transferred to another Designated Zone, including details of that Designated Zone, e. the value and quantity of Excise Goods transferred from the Designated Zone for Export, f. the value and quantity of Excise Goods produced within the Designated Zone, and g. the value and quantity of Excise Goods subject to deficiency or shortage and that which was or will be destroyed. 10. Excise Goods that are transferred from a Designated Zone to another Designated Zone in the State shall not be subject to Tax in the following cases: a. where the Excise Goods, or part thereof, are not released for consumption during the transfer, b. where the Excise Goods are not in any way used or altered during the transfer, or c. where the transfer is undertaken in accordance with the rules and controls as specified by the Authority. Cabinet Decision No. 37 of 2017 and its amendments – As published by the Ministry of Finance 17 11. For the purposes of Article 14 of the Decree-Law, a transfer of Excise Goods between Designated Zones within the State must be undertaken in accordance with the following procedures: a. the Warehouse Keeper responsible for the Designated Zone from which the Excise Goods are transferred must issue a document containing the following particulars: 1) the type, value and quantity of Excise Goods to be transferred, 2) the value of Due Tax in the event the Excise Goods were released for consumption in the course of the transfer to another Designated Zone, and 3) the details of the Designated Zone to which the Excise Goods will be transferred and the Warehouse Keeper responsible for it. b. the Warehouse Keeper responsible for the Designated Zone to which the Excise Goods have been transferred must confirm receipt of the Excise Goods, and c. the Excise Goods must be accompanied with the document issued pursuant to paragraph (a) of this Clause when transferring these goods and submitted to the Authority upon request. 12. Excise Goods may be transferred between Designated Zones within the State or from a Designated Zone for Export purposes if the following conditions are met: a. the Warehouse Keeper of the Designated Zone from which the Excise Goods are transferred shall remain responsible for the Excise Goods until they are received by the Warehouse Keeper of the Designated Zone to which the Excise Goods are transferred or until they are exported, b. the Person responsible for transferring the Excise Goods must be either a Taxable Person or a Warehouse Keeper for any of the two zones, c. if the Excise Goods are transferred by a Taxable Person, a prior consent from the Warehouse Keeper to transfer these Excise Goods must be obtained, and the Warehouse Keeper may reject the request of the Taxable Person to transfer such goods, and d. the Warehouse Keeper must retain copies of all approvals granted to the Taxable Person to transfer the Excise Goods. Cabinet Decision No. 37 of 2017 and its amendments – As published by the Ministry of Finance 18 Title Seven – Calculation of Due Tax

Article 14 – Transfer of Excise Goods in Designated Zones 1. Excise Goods may be transferred from one Designated Zone to another Designated Zone without Tax being due on them. 2. The Executive Regulation of this Decree-Law shall specify the controls and conditions of the transfer of Excise Goods from and to a Designated Zone as well as the mechanism of preserving, storing and processing such Excise Goods therein. Chapter Six – Calculation of Due Tax