Excise Tax In Dubai UAE

September 3, 2021Dated:  | |

UAE gives utmost priorities to its citizens and always tries to protect their citizens from harmful goods. The Government of United Arab Emirates decided to introduce Excise Tax on 1 October 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 goal of excise tax is to minimize consumption of the harmful commodities, at the same time as also raising revenues for the government that can be used up on public services.

When considering whether a product is an excise good, the following definitions apply:

The product which falls under the category of levying Excise Duty are:

01. Carbonated drinks  

  • Any aerated beverage excluding unflavored aerated water.
  • Any concentrations, gel, powder, or extracts intended to be made into an aerated beverage.

02. Energy drinks

  • Any beverages which is advertised, or sold as an energy drink and containing stimulant substances that provide physical and mental invigoration, which includes without limitation: ginseng, caffeine, guarana and taurine.
  • Any substance that has an equal or similar effect as the aforesaid substances.
  • Any concentrations, extracts, powder or gel intended to be made into an energy enhancing drink.

03. Tobacco and tobacco products

Excise Tax is currently applicable across the UAE on goods referred to as ‘excise goods’ at the following rates:

            – 50% for carbonated drinks
            – 100% for tobacco products
            – 100% for energy drinks

December 1st 2019 onwards, Excise Tax started to be additionally levied upon:

  • Electronic smoking tools and devices
  • Liquids used in such tools and devices
  • Sweetened drinks

It is important to understand any potential obligations you or your business may have in respect of the UAE Excise Tax.

Who has to register for excise tax?

As per the UAE Federal Decree Law Excise Tax, registering for excise tax is the responsibility of any business engaged in:

  • Excise goods importing in the UAE
  • Excise goods production where they are released for consumption in the UAE
  • The stockpiling of excise goods in the UAE in certain cases
  • Anyone who is responsible for managing an excise storehouse or designated storage space

There is no registration threshold for excise tax. Hence any corporation involved in any of the abovementioned activities should register and account for excise tax.

How will it affect consumers?

With the introduction of the new tax in the country by Federal Tax Authority, the ultimate users i.e. the consumers will have to pay more for goods which fall under the category of Excise Goods and that are harmful to human health or the environment.

When is Excise Tax due?

Excise Tax is due when goods are out for consumption i.e. when they enter unrestricted circulation in the UAE. However, it is not a transaction based tax and does not need to be sold in order for the tax to be due.

The process of registering for Excise Tax is not so complicated but might feel intimidating without the guidance from a trustworthy partner. Flyingcolour Business setup services has been the most trusted associate for helping clients form companies and keep them operating well since the past 17 years. We can help you with the process of setting up an e-Services account and registering for Excise Tax. Kindly mail your queries at info@flyingcolour.com or contact us at +971 4 4542366.

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