In 2017, the excise tax was introduced in UAE. It is a kind of indirect tax that is levied on goods specifically harmful to human and environment health. Such goods are called excise goods.

To determine what falls under excise goods, one has to know the following categories that define excise goods:

Energy drinks: Any beverage that is sold as an energy drink that contains substances which help to stimulate the mind and body through stimulants such as taurine, caffeine, ginseng and guarana is considered to be an excise good. It may also contain any substance that is similar to the ones mentioned here and has a similar effect on the body will be considered under the excise goods category. It may not be only in liquid form but any form like powder, gel, concentrated or extracts that is consumed to provide energy to the body is considered the same. All these products will be eligible for excise tax.

Carbonated drinks: Any flavoured drink that is carbonated or aerated will be considered to be eligible for excise tax. However, any unflavoured aerated water does not fall into this category. Any form of carbonated drink i.e. gel, powder, concentrated solution and extracts that are made to be consumed as an aerated drink is considered within this category.

Tobacco:  All tobacco or tobacco products are eligible for excise tax if it is enlisted in the schedule 24 of the GCC Common Customs Tariff.

Other goods that are listed under the excise taxable list are sweetened drinks, electronic smoking devices and the liquid used in such devices.

Every excise good has a different percentage of tax that is levied in them depending upon their category. A 50% tax is charged on aerated drinks and all sweetened drinks while a 100% tax is charged for energy drinks, tobacco products, electronic smoking devices and the liquids used in these devices.

If you are wondering why an excise tax is charged on these goods then the answer is simple. The Government intends to decrease the use of such products that directly or indirectly harms both human health and the environment. Meanwhile, the Government earns enough revenue from this area to utilize it for the benefit of the public in general.

Who needs to register for excise in UAE?

Any business that deals in the above-mentioned categories of goods are required to register their business for excise tax. It is mentioned in the Federal Decree-Law no. 7 of 2017 of Excise Tax in UAE that any individual or firm engaged with the import of excise goods in UAE will have to be registered for this tax. Similarly, anyone who produces these goods in UAE for in-land consumption purpose is also eligible to sign up for this law. Also, anyone who stockpiles these goods or is assigned to look after the warehouse of such goods needs to get registered.

When the law was introduced in 2017, only carbonated drinks, tobacco products and energy drinks were included in the excise tax list. Later in 2019, the other products like sweetened drinks, electronic smoking devices and their liquid were added to the list. This tax has no registration threshold and anyone dealing with such products needs to pay an excise tax to the Government.

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