Excise Tax in Dubai
Excise Tax was introduced across the UAE in the year 2017. It is a form of indirect tax levied on injurious goods that are typically harmful to human health or hazardous to the environment. These goods are also referred to as “excise goods”. When considering whether a product is deemed as an excise good, the following criterions apply:
For example, carbonated ‘fizzy’ drinks include any aerated beverage except for unflavored aerated or sparkling water. Considered to be carbonated drinks are any artificial concentrations, powder, gel, or extracts intended to be made into an aerated drink.
Energy drinks include any beverages which are marketed, or sold as an energy drink, and contain stimulant substances that provide mental, adrenal and physical stimulation, which includes without limitation the following: caffeine, taurine, ginseng and guarana. Also including any substance that’s identical or has a similar effect as the other stimulant substances. Also to be considered as energy drinks are any artificial concentrations, powder, gel or extracts that are intended to be made into an energy enhancing drink.
All Tobacco and tobacco derived products include all items listed within Schedule 24 of the GCC Common Customs Tariff.
From 1 December 2019, excise tax was levied also on:
- Electronic smoking devices and gadgets
- Liquids used in such devices and tools
- Artificially sweetened drinks.
The Rate of excise tax
According to Cabinet Decision No. 52 of 2019 on Excise Goods, Excise Tax Rates and the Methods of Calculating the Excise Price (PDF, 100 KB), the rate of excise tax is :
- 50 % on carbonated drinks
- 100 %on tobacco products
- 100 % on energy drinks
- 100 %on electronic smoking devices
- 100 % on liquids used in such devices and tools
- 50 %on any product with added sugar or other sweeteners.
The purposes behind levying excise tax
The UAE Government is levying excise tax to reduce consumption of injurious, unhealthy and harmful products while raising revenues for the government that can be spent instead on beneficial public services.
How does it affect consumers?
Consumers will have to pay more for goods that are harmful to human health or the environment.
Businesses MANDATORY to register for excise tax
Under the UAE Federal Decree Law No. 7 of 2017 on Excise Tax, registering for excise tax is mandatory for any business engaged in:
- Import of excise goods into the UAE
- The production of excise goods released for consumption in the UAE
- The stockpiling of excise goods in the UAE
- Anyone who is responsible for overseeing an excise warehouse or designated zone -a warehouse keeper.
The FTA is committed to providing extensive support and guidance to assist excise registration; however, the responsibility lies with the business to ensure required compliance obligations are in duly fulfilled.
The FTA also has the power to conduct audits of taxable corporations and subsequently impose penalties and restrictive measures on those that don’t comply with the law.
Registration for excise tax
Businesses can register for excise tax via the e-services section on the FTA website. They do need to sign up and create an account. For more details about excise tax registration, please read Excise tax registration user guide (PDF) issued by the FTA
For any general inquiries about tax registration / application, one can contact us.
There is no registration time threshold for excise tax; any corporation that intends to be involved in any of the activities listed above must register and account for excise tax.
Need Expert help with excise tax registration
Get in touch with us @ Financial Cube – We have been guiding VAT and excise tax registrations in the UAE since its inception.
We are a responsibly competent finance based network offering accounting and taxation solutions, based in the UAE.
Offering a widely experienced service portfolio in filing taxations, auditing, accounting and bookkeeping. Financial cube is your truly wholesome financial service provider offering high level VAT and Excise filing services across UAE along with tailored Corporate Tax solutions in Dubai for all your business and accounting needs in the Gulf region.