The UAE Excise Tax List includes carbonated drinks, tobacco products, energy drinks, electronic smoking devices and products with added sugar or sweeteners. These goods are harmful to human health or the environment.
Excise Tax is defined as the indirect tax that is imposed on only specific goods. The main objective of the excise tax in UAE is to reduce consumption of the commodities while increasing revenues for the government that is spent on public services.
Excise Tax Rates in UAE
- 50% on carbonated drinks
- 50% on any product with added sugar or other sweeteners.
- 100% on tobacco products
- 100% on energy drinks
- 100% on electronic smoking devices
- 100% on liquids used in such devices and tools
This 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% excise tax in UAE. Unflavored aerated water is exempted.
Tobacco and Tobacco products
Federal Tax Authority (FTA) has levied a 100% excise tax on all kinds of tobacco products. These products include:
- Cigarette rag
- Chewing tobacco
- Hand rolling tobacco
- Expanded tobacco
- Herbal smoking products
- Reconstituted tobacco sheets
Any beverages which are marketed, and sold as an energy drinks, and contain stimulant substances that provide mental and physical stimulation or include caffeine, taurine, ginseng and guarana, will fall in this category.
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 will also be levied with 100% excise tax.
Electronic smoking devices and tools
Electronic smoking devices and tools shall include all electronic smoking devices and tools and the like, whether or not containing nicotine or tobacco.
All liquid used in electronic smoking devices and tools used in such devices even if they contain nicotine or not will be levied a 100% excise tax.
If a sugar or sweetener is added to the product, it will be considered a ‘sweetened drinks’ and will be levied a 50% excise tax.
Source of sugar includes white sugar, soft white sugar, powdered sugar, soft brown sugar, and glucose syrup. Whereas sweeteners include saccharin and its salts, aspartame, sorbitol, and neotame.
- A ready-to-drink beverage or
- Concentrates, powders, gel, extracts or any other similar product that can be made into a sweetened drink
Sweetened drinks that are excluded from Excise Tax
- Ready to drink beverages that contain at least 75% milk or its substitutes
- Baby formula, follow up formula or baby food
- Handling of Foods for Special Medical Purposes
- Consumed for special dietary needs
- Beverages which include alcohol
The excise tax was also imposed on the following in December 2019:
- Electronic smoking devices or tools
- Liquids used in these devices or tools
- Sweetened drinks
Who should register for Excise Tax in UAE?
Any business in UAE which is engaged in the following activities must register for excise tax in UAE:
- the stockpiling of excise goods in the UAE in certain cases
- the production of excise goods where they are released for consumption in the UAE
- the import of excise goods into the UAE
- anyone who is responsible for overseeing an excise warehouse or designated zone i.e. a warehouse keeper.
BMS Auditing 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.
BMS provides an excellent tax compliance service in UAE that includes excise tax services and excise tax registration comprising tax planning, advisory services, training and awareness to the employees or staff, as well as support services related to excise tax return filing.
For expert guidance and consultancy on excise tax services in UAE, reach out to BMS Auditing UAE.