Excise Tax in UAE

The Federal Tax Authority (FTA) introduced excise tax in UAE as a strategic step with the purpose of promoting public health and increasing government revenue for public services. Commonly referred to as excise duty in UAE, the tax covers specific goods that are bad for health and the environment. To help businesses navigate these tax regulations, Commitbiz offers specialized excise tax services, helping companies with compliance and advisory.

What is Included Under the UAE Excise Tax List?

The UAE’s efficient and transparent excise tax regulations make it an attractive destination to start a business in UAE. All businesses that produce, import, or export excise goods from a particular zone must consider excise tax registration in UAE and compliance. Let us look at what is included in the UAE excise tax list:

• Carbonated drinks
• Tobacco and tobacco products
• Energy drinks
• Electronic smoking devices and tools
• Liquids used in electronic smoking devices
• Products with added sugar/sweeteners
   

Rates of Excise Tax in UAE

As per UAE government’s ‘Cabinet Decision No. 52 of 2019 on Excise Goods, Excise Tax Rates and the Methods of Calculating the Excise Price’, the rate of excise tax on specified goods is as follows:

• 50 percent on carbonated drinks
• 100 percent on tobacco products
• 100 percent on energy drinks
• 100 percent on electronic smoking devices
• 100 percent on liquids used in such devices and tools
• 50 percent on any product with added sugar or other sweeteners
   

Categories of Goods Subject to Excise Duty in UAE

The excise tax in UAE applies only to specific goods deemed harmful to health or the environment. Below is a detailed look at the product categories included in the UAE excise tax list:

1. Carbonated Drinks

It includes any aerated beverage and any concentrations, powder, gel, or extracts intended to be made into an aerated beverage. Carbonated drinks are subject to a 50 percent excise tax.

It is important to note here that unflavored aerated water is exempted from this.

2. Tobacco and Tobacco Products

The FTA levies a 100 percent excise tax on all kinds of tobacco products. These include cigarettes, cigarette rag, chewing tobacco, cigars, cigarillo, hand rolling tobacco, expanded tobacco, herbal smoking products, reconstituted tobacco sheets, and snuff.

3. Energy Drinks

Any beverages which are sold as energy drinks and contain stimulant substances that provide mental and physical stimulation or include caffeine, taurine, ginseng and guarana fall under this category. It must be mentioned here that the government also imposes a 100 percent excise tax on substances that have similar effects as the ones mentioned above and any concentrations, powder, gel or extracts intended to be made into an energy enhancing drink.

4. Electronic Smoking Devices and Tools

This category includes all e-smoking tools and their liquids, regardless of nicotine and tobacco content. The excise tax imposed in Dubai and other Emirates of the UAE on such products is 100 percent.

5. Sweetened Drinks

Any product having added sugar or sweeteners, whether ready-to-drink or in powder/concentrate form, is subject to 50 percent excise tax in UAE. Sweeteners like saccharin and its salts, aspartame, sorbitol, and neotame also fall in this category.

However, certain sweetened drinks are excluded from the excise tax list, which includes:

• Ready to drink beverages that contain at least 75 percent milk or its substitutes
• Baby formula, follow up formula or baby food
• Handling of foods for special medical purposes
• Drinks consumed for special dietary needs
• Beverages which include alcohol
   

Who Should Register for Excise Tax in UAE?

As per ‘UAE Federal Decree Law No. 7 of 2017 on Excise Tax’, registering for excise tax is the responsibility for companies dealing in such products.

Established businesses or entrepreneurs considering business setup in UAE in the following activities are required to complete excise tax registration in UAE with the FTA:

• Stockpiling of excise goods in the UAE, in certain cases
• Production of excise goods where they are released for consumption in the UAE
• Import of excise goods into the UAE
• Anyone who is responsible for overseeing an excise warehouse or designated zone i.e. a warehouse keeper.
   

Filing Excise Tax Return in UAE

Registered businesses must file periodic excise tax returns in UAE with the FTA. This includes declaring the amount of excise goods imported, produced, or stored. The tax period to file the excise tax returns is one month. All such businesses are required to file excise tax returns by the 15th day following the end of each tax period. In case of the failure of the registrant to submit the tax return within the timeframe specified in the law, the penalty imposed will be AED 1,000 for the first time and AED 2000 in case of repetition within 24 months.

Excise Tax Advisory with the Help of Commitbiz

For businesses navigating the tax environment in the UAE, having a good understanding of the taxes in the UAE is essential. It helps in remaining competitive and legally sound. With proven expertise and knowledge, Commitbiz can be your trusted partner for excise tax services in UAE. We offer comprehensive services which includes excise tax registration comprising tax planning, advisory services, training and awareness to the employees, and return filing. Let our tax experts handle your excise tax needs in UAE while you focus on scaling your business. Contact us today.