Excise Tax was initially implemented in the UAE on certain goods with effect from 1st October 2017 through the Excise Tax Federal Decree-Law No. (7) of 2017. Excise tax is a form of indirect tax levied on specific goods which are typically harmful to human health or the environment. These goods are referred to as “excise goods”.
The purpose behind levying excise tax is to reduce consumption of unhealthy and harmful commodities while also raising revenues for the government that can be spent on beneficial public services.
Three Categories of goods have been defined as below:
• Carbonated drinks include any aerated beverage except for unflavored aerated water. Also considered to be carbonated drinks are any concentrations, powder, gel, or extracts intended to be made into an aerated beverage.
• Energy drinks include any beverages which are marketed, or sold as an energy drink, and containing stimulant substances that provide mental and physical stimulation, which includes without limitation: caffeine, taurine, ginseng and guarana. This also includes any substance that has an identical or similar effect as the aforementioned substances. Also considered to be energy drinks are any concentrations, powder, gel or extracts intended to be made into an energy enhancing drink.
• Tobacco and tobacco products include all items listed within Schedule 24 of the GCC Common Customs Tariff.
Later, with effect from 1st December 2019 few more products were added to the purview of excise tax vide Cabinet Decision No. 52 of 2019.
• electronic smoking devices and tools
• liquids used in such devices and tools
• sweetened drinks
Consumers will need to pay more for goods that are harmful to human health or the environment.
1. Carbonated Drinks – Any aerated beverage.
2. Energy Drink – A type of drink that may contain stimulant compounds/substances that provide mental and physical stimulation, which are marketed or sold as an energy drink.
3. Tobacco and Tobacco Products – All items listed within Schedule 24 of GCC Common Customs Tariff, including electrically heated cigarettes
4. Electronic Smoking Devices and Tools – All electronic smoking tools and devices, whether or not containing nicotine or tobacco
5. Liquids used in Electronic Smoking Devices and Tools – All liquids used in such devices, whether or not containing nicotine or tobacco
6. Sweetened Drinks – Any beverage to which a source of sugar or other sweetener is added, as determined under Standard 148 and Standard 995 of the GCC Standardization Organization
In the case of Carbonated, Energy and Sweetened Drink, any powder, gel, concentrate, extract or any other form that can be converted into a beverage is also considered as excisable good.
1. Unflavored Aerated water is excluded from the category of Carbonated Drink
2. The following are excluded from the definition of Sweetened Drink-
a. Drinks containing at least 75 % milk or milk substitutes
b. Baby formula or baby food
c. Beverages for special dietary needs or medical uses
3. Drinks containing alcohol are excluded from the definition of excisable goods
| Carbonated Drinks | 50% |
| Sweetened Drinks | 50% |
| Energy Drinks | 100% |
| Tobacco | 100% |
| Electronic smoking devices & tools | 100% |
| Liquids in electronic smoking devices & tools | 100% |
