Excise Tax in UAE 2025
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What is VAT in UAE?
The UAE has come up with some new and important updates in its tax regulations, specifically on the Excise Tax UAE Executive Regulations. After the authorities decided on the change, it came into effect on December 1st, 2023.
These changes brought to the excise tax, the first since its introduction in 2017, showcase the government’s commitment and seriousness towards enhancing tax policies over time for a more effective and equitable system. They are solidifying the latest patterns seen in excise tax audits and tackling compliance challenges encountered by new-age businesses.
Do you know where excise tax is applied? In the UAE, the Excise tax is applied to goods that are harmful to the environment and human health. The tax aims to reduce the consumption of harmful substances and also to generate extra revenue for the nation.
The history behind the excise tax is that it was first brought into the limelight in 2017, and then it was fully implemented on December 1, 2019. The tax covers a wide set of goods, from sugar-based drinks to tobacco. The revised version of the Excise Tax regulations gives you a complete overview of the guidelines for taxable goods, the registration process, rates, and returns.
The changes in the tax demonstrate the dynamic and constantly changing nature of the excise tax in UAE. The regulations ensure that the operating businesses stay compliant and witness smoother transitions with the updated changes.
Let’s cover excise tax in detail, including categories, documents required, rates, registration process, and others.
What is excise tax in UAE?
Excise Tax in UAE is defined as an indirect tax that is imposed on specific harmful goods that are evaluated as not good for the health of humans or the environment. The tax is primarily implemented to cut down the consumption of unhealthy substances and, at the same time, to generate additional revenue for the welfare of the public. Moreover, the excise tax is imposed at rates that range between 50% to 100%.
It will be applicable at the time of production or import. So, it is completely different from VAT. This is because VAT is charged at every step of the supply process, but excise tax is imposed only once. Businesses that manufacture, produce, import, store, or supply excise goods have to register with the Federal Tax Authority without any failure.
Moreover, businesses have to file returns and settle the tax within the timeframe in order to avoid penalties for non-compliance.
Categories of goods subject to excise tax in UAE
| Tobacco and its Products: | Carbonated Drinks | Energy Drinks | Electronic Smoking Devices and Liquids: | Sweetened Drinks |
|---|---|---|---|---|
|
Cigarettes Cigars Chewing tobacco Hand-rolled tobacco Reconstituted tobacco sheets etc |
This includes all carbonated beverages. Concentrates Powders Gels It is not applied to plain carbonated water. |
Beverages which are marketed as energy drinks and contain stimulants such as Caffeine Taurine Ginseng Guarana |
It includes all sorts of electronic smoking substances, regardless of whether they contain nicotine or not. |
Beverages that contain added sugar such as Ready-to-drink beverages Concentrates, powders Gels and extracts to sweeten drinks. It also includes all sources of sugar such as white, powdered sugar, syrup, etc |
Beverages with 75% milk or milk substitutes.
Special medicated or dietary food.
Baby formula.
Alcoholic beverages.
How to calculate excise tax in UAE?
Excise Tax Calculation Example
Here is an example of excise tax calculation in the UAE;
For example, if a pack of cigarettes is priced at AED 20 in a store. The excise price using the tax method would be AED 20 plus AED 8, resulting in a total of AED 28.
UAE excise tax rate list
| Products | Excise Tax Rate |
|---|---|
| Tobacco Products | 100% |
| Carbonated drinks | 50% |
| Electronic smoking devices | 100% |
| Electronic smoking devices | 100% |
| Added sugar products | 50% |
| Liquids in electronic smoking devices | 100% |
Who should register for Excise Tax in the UAE?
All the businesses that supply excise goods from a designated zone have to register for excise tax. The business activities include importing, producing, or stockpiling of excise goods in the country.
Documents required for registering Excise Tax in the UAE
Business License or Valid Trade License
Passport copy or copy of Emirates ID
Proof of Authorisation
Official Declaration with complete details.
A letter from the bank confirming the registrant’s bank account details
Additional list of documents that may required includes;
Power of Attorney or Articles of Association
Partnership Agreement
Certificate of Incorporation
Documents have all the details of the business activities and size
Based on your registration type, the document requirement may also include:
Registration documents of club, charity, or association
Owner’s Emirates ID or passport copy
A copy of the decree for Federal or Emirate-based UAE Government Entities.
How to register for excise tax in UAE?
First, you need to sign up or register for an EmaraTax account. To create your account, go to FTA’s website and do not forget to activate it for further processing.
Next, access the dashboard of your EmaraTax account.
Then, you have to create a New Taxable Person Profile.
Select “View” to check into the Taxable Person Account.
Next, select “Register” under the “Excise Tax” list.
By mentioning all the details and attaching documents, complete your registration process.
Difference between Excise Tax and VAT
VAT is an indirect form of tax that is imposed on the consumption of different goods and services, and on that day, Excise Tax is also an indirect tax form that is imposed only on harmful products both for production and manufacturing.
Also, there is a slight difference in their registration process for Excise Tax and VAT. During the registration of Excise Tax, businesses have to clearly mention whether they are importing, producing, or stockpiling. In addition, they also have to mention the excise goods they are handling, such as tobacco, energy drinks, carbonated drinks, etc.
Frequently Asked Questions on Excise Tax in UAE
How to file excise tax returns?
Access the “EmaraTax” online portal to register or sign up. Make sure you have your UAE ID Pass or remember your FTA account. It is better once you go through the EmaraTax login guide. Next, you have to submit your business details and business activities. Then, move to Excise Tax to assess and declare Excise Tax Returns. Finally, you have to proceed with the payment process.
How do I pay excise tax in UAE?
Excise tax-registered businesses can pay their tax liabilities electronically via the Federal Tax Authority platform. The portal has guidelines on payment methods and other instructions. Registered businesses must make their tax payments online through the EmaraTax platform.
Can excise tax be reclaimed or refunded in the UAE?
If there is any excess tax for a specific period after it is being carried forward, the taxable person can request a refund. This application must be submitted to the Authority, following the timelines and procedures outlined in the Executive Regulations of the Federal Decree-Law.
How does excise tax impact the pricing of goods in the UAE?
The excise tax is the higher cost of the below two:
- The price listed by the Authority for the relevant excise goods in the official price list.
- The price set by the retailer, excluding the tax amount.
Are there any exemptions or reliefs available under the UAE excise tax law?
Exported excise goods can be exempted from the tax.
The Decree-Law’s Executive Regulations will define the conditions and requirements for granting exemptions from the excise tax. You can check out Clause (1) of Article – to get more information on exemptions.
What are the penalties for non-compliance with excise tax regulations in the UAE?
If a Taxable Person or Entity fails to provide price lists to the Federal TAX Authority for excise goods that are either imported, manufactured, or stored, then they will be subjected to a fine. For the first time, the fine will be AED 5,000 the first time. If there is a repetition of the same acts, the fine will be AED 20,000. Also, if the taxable entity does not register as an excise taxpayer within the given deadline, they have to pay a fine of AED 20,000.
