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Excise Tax is a form of indirect tax levied on specific goods. These goods are typically those that are harmful to human health or the environment. The objective behind the introduction of the excise tax in the UAE is to reduce their consumption so that it promotes a healthy lifestyle in the nation. Excise tax in the UAE will only be applicable to specific goods which are either imported or produced within the UAE or stockpiled in the UAE for business purposes.
In the UAE, Excise Tax is currently applied on the following goods:
• Tobacco products
• Carbonated drinks (note that this excludes sparkling water)
• Energy drinks
According to Cabinet Decision No. 52 of 2019 on Excise Goods, an excise tax will be applied additionally on the following:
• liquids used in electronic smoking devices and tools
• Electronic smoking devices and tools
• sweetened drinks.
The rates of excise tax will be as follows:
• 100 percent on liquids used in electronic smoking devices and tools
• 100 percent on electronic smoking devices
• 50 percent on any product with added sugar or other sweeteners.
The FTA called on importers, producers, and stockpilers of electronic smoking devices, liquids used in such devices and sweetened drinks to register for excise tax system as soon as possible.
Pursuant to Article 2 of the Decision, the following Goods shall be excluded from the definition of sweetened drinks:
• Ready-to-drink beverages containing at least 75% milk.
• Ready-to-drink beverages containing at least 75% Milk Substitutes.
• Baby formula, follow up 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 Prepackaged 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 Organization under the heading “General Requirements for Handling of Foods for Special Medical Purposes”, and any subsequent and relevant standards.
On Tuesday, October 29,2019, at a media workshop organized by the authority Khalid Ali Al Bustani, Director-General of the Federal Tax Authority, FTA explained the expansion of Excise tax. FTA officials attended the workshop.
