Everything you need to know about UAE’s Excise Tax on Sugar-Sweetened Products

The UAE government has announced new excise tax rates that will come into effect on December 1st, 2019 and which will further increase the price of certain categories of products.

The introduction of excise tax in the UAE has generated curiosity and concern for people and businesses who wish to know how it’s going to affect them. Food Specialities Limited interviewed a representative of PKF, UAE to address some of these questions about the excise tax in the UAE.

1. What is the Excise tax and what is the structure of it as far as you know?

  • An Excise tax is levied on specific goods which are harmful to the health of the public. Excise tax was first implemented in UAE with effect from October 1, 2017 on tobacco and tobacco products, carbonated drinks and energy drinks. From December 1, 2019, it is proposed to be levied on electronic smoking devices and tools, liquids used in electronic smoking devices and tools and sweetened drinks.

2. When will the amended UAE Excise tax come into effect?

  • Excise tax on additional goods will come into effect from December 1, 2019.

3. Which sectors of the food and beverage industries is it being levied on and what is the amount per industry?

Following are the excise tax rates:

  • On carbonated drinks – 50%
  • On energy drinks – 100%
  • On products containing tobacco – 100%
  • On Electronic smoking devices and tools – 100%
  • On Liquids used in electronic smoking devices and tools – 100%
  • On Sweetened drinks – 50%

4. How much will a pack of juice that was priced at AED 10 cost after the tax has been levied?

  • Assuming that the juice was priced at AED 10 (excluding VAT and Excise), the new price will be AED 15.75 (Excise tax of AED 5 and VAT of 0.75) for sweetened drinks.

5. Which products are exempt from the Excise tax in the UAE?

  • The UAE follows an inclusive list for taxing goods under excise
    tax provisions i.e. it will only be levied on those goods which are specified in the Excise Law and Regulations read with Cabinet Decisions issued by UAE Government. If the goods do not fall in that category, no excise tax will be levied.

6. Which industries will be most affected by the tax?

  • Industries which are importing, producing and stockpiling above mentioned excisable goods will be affected. It will also affect warehouse keepers and persons who are releasing excisable goods from an excise tax designated zone.

7. Have other such taxes been imposed on other products before and how did those industries respond?

  • As mentioned earlier, excise tax in the UAE was initially on tobacco and tobacco products, carbonated drinks and energy drinks. Compliances have been undertaken by the covered industries.

8. What is your recommendation to companies whose products will be taxed?

  • Businesses need to evaluate the impact of excise tax on their
    goods and register the goods well in advance with the Authorities. Further, businesses should ensure that business is ready before the implementation date (i.e. December 1, 2019) by ensuring IT systems are ready, processes are defined, and staff is adequately trained.

9. Which are the GCC countries that are implementing the amended Excise tax?

  • KSA was the first GCC country to levy excise tax on sweetened / sugary drinks and electronic smoking devices, however, it has post- poned such levy to be implemented from December 1, 2019. The UAE introduced cabinet decision 52 of 2019 in the month of August 2019 proposing to implement such new levy.

10. If anyone has any questions or wishes to seek your company advice who should they contact?

  • For any further clarification or inquiries about registering excise tax in UAE, visit the official FTA website – this has detailed guides on the new excise tax law and how you can register for it as a business. You can also contact the FTA through the following channels:

Call on 600 599 994 or +971-4-777-5777

Email to info@tax.gov.ae