UAE Excise Tax 2026: The Essential Compliance Guide for Businesses

UAE Excise Tax 2026
 

UAE’s Excise Tax rules are changing drastically from January 2026. New methods for tax calculations are implemented on sweetened drinks, and the regulations for Warehouse keepers are also being changed. Due to these changes, UAE business owners need to understand the changes and comply accordingly.

Excise Tax | ETGTP1, guide, explains the current Excise Tax rules in a simple and clear way. It explains the new tax rates, who needs to register, and how Designated Zones work, helping you understand the complexities and stay compliant.

1. What is Excise Tax?

Excise Tax is a type of tax charged on specific products that are considered to be harmful to people’s health or to the environment. This includes items like tobacco, sugary drinks, and energy drinks.

This is added at different stages as a product is sold from one business to another, unlike VAT. Excise Tax is usually charged just once. This is applied when the goods are imported into the country, produced locally, or released for use in the market.

Liability arises when Excise Goods are:

• Applied when goods are imported in the UAE from another country.

• Applied when goods are manufactured within the UAE

• Applied when goods are taken out of a Designated Zone for consumption or selling purposes.

• Applied when goods are stored in large quantities, and the Excise Tax has not been paid.

• In such situations, businesses are required to give a financial guarantee to cover the  Excise Tax that may be due.

2. New 2026 Rates and Categories

From January 1, 2026, “Carbonated Drinks” will not be treated as a separate group for Excise Tax in the UAE. Instead, they would be taxed based on the new tiered system, depending on the quantity of sugar in the drink.

Here’s a quick look at the main excise tax rates for 2026:

3. Registration: Who and When?

If your business imports, makes or stores Excise Goods, you must register with the Federal Tax Authority (FTA). There is a minimum limit for the Excise Tax registration

Key points to know:

• Deadline: Registration must be done within a month, 30 days after you start dealing with Excise Goods.

• Exceptions: If the Excise Goods are not handled frequently (less than once every 6 months, or fewer than 3 times in 2 years) FTA allows you to skip the registration 

• Penalty: If not registered on time, there could be a fine of AED 20,000.

4. Designated Zones and Warehouse Keepers

A Designated Zone (also known as an excise warehouse) is a specific area where the Excise Goods can be stored by the businesses without paying immediate tax. Tax is only imposed if the goods move out of the zone for sale or use in the UAE. 

Warehouse Keeper Responsibilities:

• Register with the FTA to manage legally in the zone.

• Keep accurate records of goods entering the zone, moving out, transferred, or destroyed.

• Renew your registration every year. If not adhered to, the zone status would expire, and will be bound to pay taxes on all goods in the warehouse.

5. Filing Returns and Payments

Businesses registered for the excise tax must submit the return every month.

• Deadline: File your Excise tax return and pay the tax by the 15th of the following month.

• Auto-fill: The EmaraTax portal makes it easier by automatically filing the return based on the monthly records of imports, production or local purchases.

• Deductible tax: Claim the tax which you have already paid for the goods that were later exported or used for another excise product.

How a Flyingcolour Tax Consultant Can Help?

Keeping up with the 2026 sugar-tax rules and warehouse regulations can be a bit confusing. We make sure to simplify by helping you:

• Product Classification: We help you to check the sugar levels and lab reports to ensure your products are in the right category.

• Registration & Renewal: We help you with the registration for Excise Tax and renew your Designated Zone every year.

• Return Filing: Making sure all your monthly tax returns (EX201, EX202A) are filled out correctly.

• Audit Support: Helping you during FTA inspections or reviews, so your business is properly represented.

Frequently Asked Questions (FAQs)

Q: Do I pay Excise Tax if I am a consumer?

A: No. It's already included in the price you see on the shelf

Q: What is a Digital Tax Stamp (DTS)?

A: It’s a special security label on tobacco products which helps you track the product and updates if you have paid the taxes on them.

Q: Can I get a refund for unsold stock?

A: Yes. If you already paid the old 50% flat tax on stock, which now falls under a low tax rate in the 2026 sugar base system, then you can claim the partial refund on the difference.

Q: What happens in a Tax Audit?

A: The FTA could review the records, data, or goods, making sure you are following the Excise Tax rules. They usually provide you a notice before 10 business days before the inspection.

To learn more about UAE Excise Tax 2026: The Essential Compliance Guide for Businesses, book a free consultation with one of the Flyingcolour team advisors.

Disclaimer: The information provided in this blog is based on our understanding of current tax laws and regulations. It is intended for general informational purposes only and does not constitute professional tax advice, consultation, or representation. The author and publisher are not responsible for any errors or omissions, or for any actions taken based on the information contained in this blog.