An indirect tax known as excise tax is imposed on products that are hazardous to human health. Excise tax in UAE is an internal tax that is levied on a variety of goods that are bad for the environment and human health, including alcohol, gasoline, tobacco, and carbonated beverages.
Excise tax is currently applied on the following goods:
- Tobacco and tobacco products
- Liquids used in electronic smoking devices and tools
- Electronic smoking devices and tools
- Carbonated drinks (excluding sparkling water)
- Energy drinks
- Sweetened drinks
It is paid by the manufacturer and wholesaler and is added to the product’s price; buyers do not pay it directly. Excise tax was implemented in 2017, and was extended to cover sweetened beverages, e-cigarettes, and all varieties of e-liquids in 2019.
Who has to Register for Excise Tax?
There is no minimum registration threshold for Excise Tax in the UAE. As such, any business intending to engage in excise-related activities must register before commencing such activities, regardless of the volume or value involved.
Businesses operating in the UAE must register for Excise Tax if they are involved in any of the following activities:
- Stockpiling excise goods under specific conditions
- Producing excise goods intended for consumption within the UAE
- Importing excise goods into the UAE
- Managing an excise warehouse or designated zone (i.e., acting as a warehouse keeper)
Excise Tax Products in UAE
The following products fall under excise tax in UAE:
- All aerated beverages, excluding plain aerated water, are classified as carbonated drinks
- Caffeine, taurine, ginseng, and guarana are just a few examples of the stimulant compounds included in energy drinks and other beverages branded or sold as such and that provide both mental and physical stimulation
- Tobacco and related products and devices
This is how the excise tax rates are applied in UAE:
E-smoking products & liquids | 100% |
Tobacco products | 100% |
Artificially sweetened products | 50% |
Energy drinks | 100% |
Carbonated drinks | 50% |
Ad valorem and specific excise tax are the two tax calculation options. While specific taxes are fixed monetary amounts on items, ad valorem employs a fixed percentage on specified goods or services. Excise taxes are occasionally levied on products with substantial societal costs like alcohol and cigarettes.
Steps for Excise Tax Registration
All UAE tax registrations are done through the Federal Tax Authority (FTA) website. These are the steps to register for excise tax:
- Create an account on the EmaraTax portal
- Add a new Taxable Person or select the existing Taxable Person profile
- Select “View” > “Excise” > “Register”
What Are the Exempted Goods From Excise Tax?
- Personal identity documents of authorized signatory (Passport, Emirates ID)
- Bank letter
- Details of firm type (sole proprietorship, LLC, partnership)
- Official document detailing business to excise tax (with letterhead)
- Trade license
- Business paperwork (Certificate of Incorporation, Articles of Association, Owner identification documents)
The FTA will take around 20 working days to review your application. You can register yourself or hire a tax expert to help you.
Can Businesses be Exempted from Excise Tax?
- Businesses can be exempted from excise tax registration under either of two conditions:
- The goods are imported less than once every six months
- The goods are imported less than four times in two years
The following products are exempted from excise tax:- Ready-to-drink beverages containing at least 75% milk
- Infant food
- Beverages eaten for dietary reasons
- Beverages used for medical purposes
Products are typically charged when they are released or consumed. In this case, the maker, manufacturer, or importer of the taxable items will be responsible for paying the excise tax.
Filing an Excise Tax Return in UAE
The deadline for filing an excise tax return is by the 15th of every month. Businesses might have to complete additional forms every month, as per their business activities:
- Excise liability forms
- Excise declarations forms
- Deductible excise tax
You can e-file these forms on the EmaraTax portal. Once you submit the forms, you must print out the confirmation to show Customs.
Excise Tax Penalties
You can face multiple penalties related to excise tax in UAE. Below are a few common fines:
Failing to register for tax | AED 10,000 |
Failing to maintain records |
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Failing to file excise tax return |
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Misreporting prices without tax |
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Failing to provide price list to relevant authorities |
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FAQ's
The UAE has had excise tax since 2017. Businesses have to register for excise tax if they are involved in any of the eligible activities.
There is a 50% excise tax in UAE on carbonated drinks and products with artificial sweeteners. There is a 100% excise tax on energy drinks, e-smoking, and tobacco products.
A taxable person can be an individual or entity who is liable to pay tax.
Tax registration is mandatory for every taxable person. Businesses also have to register for excise tax in UAE if they are eligible for it.
You will need a valid TRN to complete excise tax registration. You can register for excise tax on the EmaraTax platform.
Businesses have to file excise tax returns by the 15th of every month. There is a 50% to 100% excise tax in UAE.
You have to file an excise tax return every month. You can e-file on the EmaraTax portal, and may need to file additional forms based on your business activities.
You can face penalties for excise tax in UAE for missing records, missing the registration deadline, and missing payment deadlines.
