The implementation of excise tax in the UAE in 2017 requires every business that sells products considered harmful to human health and the environment to pay a tax to the government. It aims to reduce consumption of these goods and increase government revenues for spending on public services. Tobacco, energy drinks, carbonated drinks, and other products in the excise goods category fall under this law. Those who pay excise taxes are either: importers of excise goods, producers of excise goods, persons who release goods from excise taxied zones, stockpiles’ of excise goods, in certain cases and warehouse keepers, in certain cases.
In some instances, excise tax may become the responsibility of another person involved in any of the above activities, if the original tax payer fails to pay. The supplier is usually required to account for the excise tax on the goods within the UAE when a business or consumer purchases the goods within the UAE (As the tax is included in the purchase price.). In some cases, excise goods will be physically labeled to indicate that tax has been paid on them.
What is the process of excise tax?
The person importing, stockpiling, producing, or releasing excise goods for consumption within the UAE must register for excise tax at the time of importation, stockpiling, production, or release, so as to become a taxable person and account for the excise tax due under the FTA. Like other indirect taxes such as VAT, excise tax does not need to be paid at every point of the transaction - once the excise tax for the goods has been paid, the excise tax is satisfied for those goods.
Goods and rates applicable to excise
These are the goods and rates of tax applicable in the UAE to which excise tax is applied:
• Tobacco and tobacco products – 100% (from 1 October 2017)
• Liquids used in electronic smoking devices and tools – 100% (from 1 December 2019)
• Electronic smoking devices and tools – 100% (from 1 December 2019)
• Carbonated drinks – 50% (from 1 October 2017)
• Energy drinks – 100% (from 1 October 2017)
• Sweetened drinks – 50% (from 1 December 2019)
DARTC is a leading tax consultancy firm in Dubai, United Arab Emirates that has experts with insight and experience in excise tax laws. The service we provide includes registration of excise tax, filing monthly excise tax return, excise tax compliance, planning and advice, assessment of tax calculations, and all tax advisory services.
For more information on the excise tax, please contact us!
DARTC can help with the following excise tax matters.