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Excise Tax In UAE

In the UAE, the excise tax was imposed on tobacco and tobacco products, energy drinks, and carbonated drinks. The nation had chosen to levy an excise tax on all e-cigarettes, e-liquids and sweetened drinks signed and ratified this January. With this implementation, a substantial change has been observed in firms that produce, supply or export such goods.

The Federal Tax Authority of UAE has made an effort and declared an entirely new procedure of registration and has called on concerned businesses to register their products on the FTA’s system.

A healthy lifestyle has long been a key concern for the UAE government and with this program, it is reasonable to anticipate the prevention of diseases arising from the consumption of sugary drinks and tobacco products. As quoted by the Cabinet General Secretariat “The decision comes to support the UAE government’s efforts to enhance public health and prevent chronic diseases directly linked to sugar and tobacco consumption.”

Accordingly, the Tax is applied as follow:

  1. An Excise Tax of 100% is levied on all tobacco products. All the electronic smoking devices and equipment, as well as all the liquids used in the electronic smoking devices; regardless of the nicotine content in them will be taxed.
  2. An Excise Tax of 50% will be levied on any product with added sugar or other sweeteners which may or may not be in the form of beverages. It could even be in the form of concentrate, powder, extract or any sort of product that might be converted into a beverage.

Note: The Authority still has exempted certain beverages from the scope of the excise tax. 

The excluded beverages are the following:

  1. Beverages that are ready-to-drink and contain no less than 75% milk or milk substitutes.
  2. Child nourishing food or baby formulas.
  3. Special dietary need beverages that are specifically processed or formulated to satisfy particular dietary requirements which may be essential for because of a physical or physiological condition.
  4. Special medical use beverages that are specially processed and presented for the dietary management of the patients and may be used only under medical supervision.

Businesses or person to register to Excise Tax that is engaged in the following activity:

  1. Importing of excise goods;
  2. Production of excise goods;
  3. Releasing goods from an excise tax designated zone;
  4. Stock pilers of excise goods, in certain cases; and
  5. Warehouse keepers, in certain cases.

Hence Importers, producers, Stock pilers, warehouse keepers, etc. that deal with electronic smoking devices and liquids that are used in such devices along with sweetened drinks need to register with the Excise Tax system. Failure in registering within the specified time period can lead to fines and various other obstacles.

Businesses are required to monitor further Excise tax developments on Standards and Procedures for implementing the Tax on the products.

AM Audit will be glad to help you with any queries regarding your business

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