New Service Launched to Measure Natural Loss in Excise Goods
- 24.10.2025
- Posted by: Uwe Hohmann
- Categories: Tax, Dubai
The FTA (Federal Tax Authority) has introduced a technical service that could reduce the tax burden for manufacturers dealing with excise goods. If your business produces, stores, or transports products subject to excise tax, this development deserves your attention.
Regular compliance reviews reveal a persistent issue across UAE businesses: invalid tax invoices that prevent VAT (Value Added Tax) recovery.
The financial impact of this oversight can be substantial, with businesses missing out on reclaiming Input VAT due to incomplete documentation.
Understanding the New Service
The Abu Dhabi Quality and Conformity Council signed an agreement with the FTA to provide specialized measurement services for natural loss in excise goods. This service addresses a practical challenge that manufacturers have faced: how to properly account for product losses that occur naturally during production, storage, or transportation.
Natural loss refers to reductions in product volume or weight caused by the inherent characteristics of the goods themselves. Evaporation is a common example. Until now, businesses lacked an official technical mechanism to measure and document these losses for tax purposes.
Who Can Benefit from This Service
The service is available to excise taxpayers and registered warehouse keepers operating within designated zones. If your business manufactures or handles products like tobacco, energy drinks, carbonated beverages, or electronic smoking devices, you operate in a sector where natural loss can be significant.
The key benefit is straightforward: properly documented natural loss can qualify for exemption from excise tax obligations. This applies when goods become unfit for consumption due to their natural characteristics, not due to operational errors or accidents.
How the Measurement Process Works
The Abu Dhabi Quality and Conformity Council operates through its Central Testing Laboratory, which has been accredited as the first independent technical entity authorized to conduct these specialized tests. The process involves collecting samples, performing laboratory analysis, and evaluating the conditions under which your products are produced, stored, and transported.
The laboratory generates detailed reports based on actual data rather than estimates. These reports provide the documentation needed when declaring lost or damaged excise goods to the FTA. The accuracy of this technical analysis strengthens your compliance position and reduces the risk of disputes during audits.
What This Means for Compliance
This initiative implements FTA Decision No. 6 of 2025, which establishes the standards and procedures for handling natural loss in designated zones. The decision creates a formal framework where previously there was ambiguity.
For businesses, this means clearer compliance pathways. You now have an official route to measure, document, and claim exemptions for natural losses. The service supports voluntary compliance by providing transparent, technically sound evidence that meets regulatory requirements.
Considerations
The cost and timeline for obtaining a natural loss measurement report will depend on the complexity of your operations and the products involved. You should factor this into your operational planning if natural loss represents a material portion of your production volume.
Keep in mind that this service applies specifically to losses resulting from the natural properties of goods. It does not cover losses from operational issues, equipment failure, or accidents. The technical examination focuses on inherent characteristics like volatility, moisture content, or chemical stability.
How TME Services Can Help
Managing excise tax compliance requires specialized knowledge, particularly when dealing with technical measurements and regulatory exemptions.
At TME Services, our experienced tax consultants work with manufacturers and businesses across the UAE to optimize their tax positions while maintaining full compliance with the FTA requirements.
We can help you assess whether the natural loss measurement service applies to your operations, guide you through the documentation process, and integrate the results into your overall tax strategy. Our team stays current with regulatory developments to ensure your business benefits from every available exemption and compliance pathway.
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