What Is EXTP014 and Why Does It Matter?
If your business holds, transfers, or stores excise goods in the UAE, a critical new Federal Tax Authority (FTA) clarification could protect you from unexpected tax exposure.
FTA Public Clarification EXTP014, issued under the UAE's Federal Decree-Law No. 7 of 2017 on Excise Tax, takes effect on 1 July 2025 and replaces the earlier EXTP011. It provides long-awaited clarity on how natural losses known formally as "natural shortages”, are treated for excise tax purposes.
When Does an Excise Shortage Become Taxable?
Under the UAE excise tax law, goods that are damaged, lost, or short while being stored, transferred, or held under a duty-suspension arrangement are ordinarily treated as "released for consumption”, making them subject to excise tax.
This is the general rule. But EXTP014 carves out a meaningful exception for genuine natural shortages.
What Qualifies as a Natural Shortage Under FTA Rules?
EXTP014 confirms that shortages caused by the inherent natural characteristics of excise goods are not treated as a release for consumption and therefore are not taxable provided strict conditions are satisfied.
Losses that qualify as natural shortages
- Evaporation
- liquid excise goods that reduce in volume during storage or transfer.
- Moisture loss
- Irretrievable residues
- Normal production-related losses
Losses that do not qualify
The following loss types are explicitly excluded from natural shortage treatment:
- Negligence - losses attributable to poor handling or oversight
- heft - losses due to criminal activity
- Operational inefficiencies -avoidable losses from substandard processes
If your shortage falls into any of these categories, it remains a taxable release for consumption regardless of the amount.
How to Get an FTA-Approved Independent Laboratory Report
This is the most critical practical step in claiming natural shortage relief and the one most businesses need to act immediately.
What must the report confirm?
To benefit from the natural shortage exemption, the warehouse keeper or taxable person must obtain a report from an FTA-approved independent laboratory. The report must confirm:
- The permissible or expected percentage of natural shortage
- That the shortage is attributable to the natural characteristics of the specific product
Key facts about the laboratory report
| Requirement |
Detail |
| Issued by |
FTA-approved independent laboratory |
| Valid for |
2 years from date of issue |
| Must be obtained |
Before declaring any natural shortages on EmaraTax |
| Application deadline (transitional) |
On or before 31 March 2026 |
Important: The declared shortage percentage on EmaraTax cannot exceed the approved threshold confirmed in the laboratory report.
Key Dates and Transitional Relief Under EXTP014
EXTP014 introduces helpful transitional provisions that give businesses additional time to comply without facing immediate tax exposure.
| Date |
What Happens |
| 16 March 2026 |
EXTP014 takes effect; EXTP011 is replaced |
| 31 March 2026 |
Deadline to submit application for approved lab report (transitional period) |
| 1 July 2025 – 30 June 2027 |
Transitional validity window: any report issued within 12 months of 1 July 2025 is deemed valid for this entire period |
This means if you act promptly and secure your laboratory report before 31 March 2026, you will be covered retroactively from 1 July 2025 through 30 June 2027 a two-year compliance window.
Which excise goods are most affected by natural shortages
Natural shortages are most commonly relevant for liquid excise goods such as tobacco products, energy drinks and sweetened beverages particularly those subject to evaporation or container residue losses during storage and transfer.
Call for Consultation
CA Ajil Varghese | Associate Director - Indirect Tax
+971 54 2119 621
Ajil.Varghese@CLAemirates.com
