VAT-Explained
Excise Tax in the UAE: Overview and Applicability
Excise Tax was first introduced in the UAE on 1st October 2017 under Federal Decree-Law No. (7) of 2017. It is an indirect tax levied on goods deemed harmful to human health or the environment, commonly referred to as “excise goods.” The primary aim of the tax is twofold: to reduce the consumption of such products and to generate revenue for public health and safety services.
Categories of Excisable Goods
Excise tax currently applies to the following categories:
Carbonated Drinks – Includes all aerated beverages except unflavored sparkling water. This also includes powders, gels, extracts, or concentrates used to prepare such drinks.
Energy Drinks – Beverages marketed as energy drinks containing stimulants such as caffeine, taurine, ginseng, guarana, or similar substances. Powders, gels, and other forms used to make energy drinks also fall under this category.
Tobacco and Tobacco Products – All items listed under Schedule 24 of the GCC Common Customs Tariff, including heated tobacco products.
Electronic Smoking Devices and Tools – Includes all e-cigarettes, vapes, and similar devices, whether or not they contain nicotine or tobacco.
Liquids Used in Electronic Smoking Devices – All liquids used in such devices, regardless of nicotine or tobacco content.
Sweetened Drinks – Beverages with added sugar or sweeteners as defined under GCC standards 148 and 995. Powders, gels, or concentrates used to prepare sweetened drinks are also included.
Excise Tax Exclusions
Certain products are excluded from excise tax, including:
Unflavored Aerated Water
Sweetened Drinks that:
Contain at least 75% milk or milk substitutes
Are classified as baby formula or baby food
Are designated for medical or dietary use
Alcoholic Beverages (regulated under separate laws)
Excise Tax Rates in the UAE
| Excisable Product | Tax Rate |
|---|---|
| Carbonated Drinks | 50% |
| Sweetened Drinks | 50% |
| Energy Drinks | 100% |
| Tobacco & Tobacco Products | 100% |
| Electronic Smoking Devices & Tools | 100% |
| Liquids in Electronic Smoking Devices & Tools | 100% |
Impact on Consumers and Businesses
Excise Tax increases the retail price of targeted products, which encourages consumers to limit the consumption of items considered harmful. Businesses dealing with excise goods must register with the Federal Tax Authority (FTA), file regular returns, and maintain accurate inventory and transaction records.
How Black Stone Tax Consultants Can Help
At Black Stone Tax Consultancy, we provide end-to-end Excise Tax compliance and advisory services:
Excise Tax Registration & Filing
Classification & Assessment of Excisable Goods
Compliance Reviews & Record-Keeping Guidance
Assistance with Excise Tax Returns and Reporting
IT System Alignment for Excise Compliance
Stay compliant and informed contact us today to ensure your business meets all Excise Tax obligations in the UAE.
