What is excise tax?
Excise tax was introduced across the UAE in 2017. Excise tax is a form of indirect tax levied on specific goods which are typically harmful to human health or the environment. These goods are referred to as “excise goods”.
When considering whether a product is an excise good, the following definitions apply:
- Carbonated drinks include any aerated beverage except for unflavoured aerated water. Also considered to be carbonated drinks are any concentrations, powder, gel, or extracts intended to be made into an aerated beverage.
- Energy drinks include any beverages which are marketed, or sold as an energy drink, and containing stimulant substances that provide mental and physical stimulation, which includes without limitation: caffeine, taurine, ginseng and guarana. This also includes any substance that has an identical or similar effect as the aforementioned substances. Also considered to be energy drinks are any concentrations, powder, gel or extracts intended to be made into an energy enhancing drink.
- Tobacco and tobacco products include all items listed within Schedule 24 of the GCC Common Customs Tariff.
Rate of excise tax
The rates of excise tax in the UAE will be:
- 50 per cent for carbonated drinks
- 100 per cent for tobacco products
- 100 per cent for energy drinks.
By January 2020, the UAE government aims to expand the scope of taxable excise goods. According to Cabinet Decision No. 52 of 2019 on Excise Goods, Excise Tax Rates and the Methods of Calculating the Excise Price, excise tax will be applicable additionally on the following:
- liquids used in electronic smoking devices and tools
- electronic smoking devices and tools
- sweetened drinks.
The rates of excise tax will be as follows:
- 100 per cent on liquids used in electronic smoking devices and tools
- 100 per cent on electronic smoking devices
- 50 per cent on any product with added sugar or other sweeteners.
Purpose behind levying excise tax
The UAE Government is levying excise tax to reduce consumption of unhealthy and harmful commodities while also raising revenues for the government that can be spent on beneficial public services.
How will it affect consumers?
Consumers will need to pay more for goods that are harmful to human health or the environment.
Businesses required to register for excise tax
Under the UAE Federal Decree Law No. 7 of 2017 on Excise Tax, registering for excise tax is the responsibility of any business engaged in:
- the import of excise goods into the UAE
- the production of excise goods where they are released for consumption in the UAE
- the stockpiling of excise goods in the UAE in certain cases
- anyone who is responsible for overseeing an excise warehouse or designated zone i.e. a warehouse keeper.
FTA is committed to providing extensive support and guidance to assist with this; however, the responsibility lies with the business to make sure that any required compliance obligations are fulfilled.
FTA has the power to conduct audits of taxable corporates and subsequently impose penal measures on those that do not comply with the law.
How to register for excise tax?
Businesses can register for excise tax through the e-services section on the FTA website. However, first, they need to sign up and create an account. For more details about excise tax registration, please read Excise tax registration user guide (PDF)
For general inquiries about tax registration and/or application, you may contact Federal Tax Authority through the enquiry form or send an email to email@example.com. You can also call on 600 599 994 or 04-7775777.
Deadline for registering
There is no registration threshold for excise tax; therefore, any corporation who intends to be involved in any of the activities listed above must register prior to the date of introduction, i.e. 1 October 2017, and account for excise tax.
Updated on 23 Oct 2019