Everything you need to know about the excise tax in the UAE

The UAE government has announced new excise tax rates that will soon come into effect, which will further increase prices of certain categories of products sold in the country. The introduction of excise tax in the UAE has got many people and businesses asking questions on how it’s going to affect them. MyBayut is here to answer all your questions about the announcement of the excise tax in the UAE.

FAQs about the New UAE EXCISE TAX LAW

What is excise tax in UAE?

Excise tax aka ‘sin tax’ is a form of indirect tax that is levied on goods which are typically considered harmful to human health or the environment. This usually includes carbonated drinks and products containing tobacco.  The excise tax was first introduced across the UAE in 2017 on specific goods. 

When will the amended UAE excise tax come into effect?

The Federal Tax Authority (FTA) has announced new rates for excise tax in the UAE and has even expanded the list of excise goods. The new excise rates will come into effect from 1 December 2019. Once in effect, all consumers who wish to purchase excise goods will be required to pay the excise tax, in addition to VAT. Producers, importers and stockpilers of excise goods will also be required to register these goods in the new system. 

This increase in excise rates in the UAE was initiated to support the government’s efforts to enhance public health and prevent chronic diseases directly linked to the consumption of sugar and tobacco. 

How much percentage of UAE excise tax will be applicable?

The new UAE excise rates that will come into effect from 2020 are as follows: 

Excise tax percentage in UAE

• 50% for carbonated drinks
• 100% for energy drinks
• 100% for products containing tobacco 

Which excise goods will be levied under the UAE excise tax law?

The Excise tax in the UAE will be applied to any products that are considered harmful to human health or the environment. Here is a look at the list of excise taxable products in the UAE. 

Full list of excise goods in UAE

• Sweetened beverages 
• Energy drinks or any other any concentrations, powder, gel, or extracts intended to be made into an energy beverage
• Carbonated drinks or any other any concentrations, powder, gel, or extracts intended to be made into an aerated beverage
• Cigarettes
• Electronic smoking devices aka e-cigarettes 
• E-liquids used in electronic smoking devices, whether or not they contain nicotine or tobacco

Which products are exempt from the excise tax in the UAE?

Beverages that are not included in the new tax include:

• Ready-to-drink beverages containing at least 75% milk or milk substitutes
• Baby formula or baby food
• Beverages consumed for special dietary needs, as determined under Standard 654 of the GCC Standardization Organization under the heading ‘General Requirements for Pre-packaged Foods for Special Dietary Use’ and any subsequent and relevant standards
• Beverages consumed for medical uses, as determined under Standard 1366 of the GCC Standardization Organisation under the heading ‘General Requirements for Handling of Foods for Special Medical Purposes’, and any subsequent and relevant standards

Excise tax for businesses

With the onset of new products being levied by the new excise tax law, businesses, producers, importers, stockpilers and warehouse keepers will be required to register their UAE excise goods in the new system introduced by FTA. Businesses who are already registered for excise tax returns in UAE will need to re-register their items. 

The FTA’s new system for registering excise tax will be rolled out in two phases: Phase one will be the registration of tax on sweetened drinks while Phase two will be for registration of electronic smoking devices and liquids used in the devices.

How to register for excise tax in the UAE?

Excise tax registration is mandatory for all businesses dealing with excise goods in the UAE. The process can easily be done through the e-services section on the FTA website. All you need to do is log in or sign up with your details on FTA excise tax portal and follow the simple instructions they have there. 

Currently, the FTA is hosting free workshops for businesses to train them on the new excise tax system. Business can register online on the FTA website for these excise tax workshops in UAE.

I have more questions, who can I contact?

For any further clarification or inquiries about registering excise tax in UAE, visit the official FTA website – this has detailed guides on the new excise tax law and how you can register for it as a business. You can also contact the FTA through the following channels:

• Call on 600 599 994 or +971-4-777-5777
• Email to info@tax.gov.ae
• Enquiry form on the FTA website

That concludes this guide on the new rates for UAE excise tax products. We hope you found this informative enough to answer some of the questions you had. We’ve got many more articles that cover tax in the UAE like VAT exemption on real estate transactions and even VAT refunds for tourists. For more articles like these, make sure to check the Laws section of our blog.

Also, if you are looking for a new home in the UAE, browse through Bayut’s latest listings for properties for sale or rent. 

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