Excise Tax in UAE

Comprehensive Information on Excise Tax in UAE

Almost all countries of the world levy excise taxes on various products, and the UAE is no different. It is well known that the UAE government is particular about maintaining a health standard in the country. So, a healthy lifestyle has been among the top priorities of the government. In the country, the excise tax is now levied on energy drinks, tobacco, tobacco-related products, and carbonated drinks. Along with this from 1st December 2019, the govt. implemented excise tax in UAE on all kinds of e-cigarettes, sweetened beverages, and e-liquids used in e-cigarettes.

Reasons for levying excise taxes on various products in the UAE
  • With such initiatives, the government is trying to control different kinds of ailments, which arise due to the consumption of these harmful products. Also, public health is enhanced with such steps. Usage of such products also causes harm to the environment, especially the smoking consumables. It will be easier to prevent certain chronic diseases directly linked to tobacco and sugar consumption through such moves.
  • Along with health and ecological concerns, the UAE government is also looking at the prospect of revenue generation through the widening of Excise taxes. With the introduction of excise tax on new products, there will be considerable changes in businesses that trade, manufacture, and even import them. Companies offering excise tax services in UAE will be able to explain the matter in detail.
New products covered by excise tax from 1st December 2019 with a tax rate

Two product categories have been added for UAE excise tax. They are as follows:

  • Sweetened and carbonated drinks – Sweetened drinks covered by excise tax are such products in which a sugar source is added, or there is the addition of some sweetener. These drinks are available in ready-to-drink beverages. You can also find these in the form of gels, concentrates, powders or extracts. These can be made into some sweetened drinks. All types of sugar sources like soft white sugar, white sugar, soft brown sugar, powdered sugar, or glucose syrup are included. Sweeteners include the likes of sorbitol, neotame, saccharin, and various salts and aspartame. The excise tax rate in UAE for such products is pegged at 50%.
  • Electronic smoking tools and devices – All kinds of electronic smoking tools and devices, whether it contains tobacco or nicotine or not, will come under excise tax services in UAE. Along with the tools and devices, the e-liquids used in electronic smoking devices also get covered by the excise tax in UAE. 100% tax is levied on these products in the region.

Apart from these two categories, other categories falling under the Excise tax regime are:

  • Energy drinks– This category includes beverages sold as energy drinks and containing stimulant substances such as guarana, taurine, ginseng, and caffeine.
  • Tobacco and Tobacco based productsTobacco and the products derived from tobacco fall under excise tax in the UAE. These include Chewing tobacco, expanded tobacco, Herbal smoking products, Cigars, Hand rolling tobacco, etc.
The tax exempted products

Certain types of beverages and foods are exempted from the excise tax coverage in the UAE. These are:

  • Unflavored aerated water
  • Ready to drink beverages with minim 75% milk
  • Baby formula/food
  • Beverages with alcohol
  • Foods used for Medical Purposes
What are the steps that businesses need to take?

The UAE’s Federal Decree-Law, No seven on the excise tax, clarifies the scope of businesses. It says that people or businesses which carry out any of the below-mentioned activities must get excise tax registration UAE done.

  1. Excise goods production
  2. Excise goods import
  3. Release of goods from the designated zone for excise tax
  4. Warehouse keepers
  5. Excise goods stockpilers

Certain kinds of people in the UAE must complete the procedure of excise tax registration at the earliest. They include manufacturers, importers, warehouse keepers, and stockpilers of sweetened drinks, electronic smoking devices, and e-liquids used in e-cigarettes, etc. With the excise tax registration UAE, they will be able to pay the excise duty in a legitimate way, without hassles. However, if they fail to do the registration within the stipulated period, it can lead to various kinds of problems. They may have to cope with legal hassles, and there can be fine payment too.

Hallmark International Auditors offering comprehensive excise tax registration and related services in the UAE nowadays such as –

  • Registration for excise tax
  • De-registration
  • The product listing and classification for qualifying registration
  • Stock/inventory counting and duty calculation
  • Consultancy on stockpiles.
  • Ongoing Excise duty return filing and compliance services
  • Excise duty consultancy on latest amendments/updates from FTA