Are Businesses ready to deal with the Excise Tax in UAE?

Posted on Nov 22, 2017

Are Businesses ready to deal with the Excise Tax in UAE?

The United Arab Emirates (UAE) has revealed details about the new excise tax due to be imposed on tobacco, and energy and fizzy drinks. Basically a strengthened economy, it is big question to see whether businesses in the region are fully loaded to deal with this new tax regime. 

The UAE had earlier announced plans to impose excise tax on tobacco and energy drinks at a rate of 100 percent, and on fizzy drinks at a rate of 50 percent on, with the exception of carbonated water, starting October 1, 2017. Excise tax is primarily levied on products that tend to negatively impact the health and environment. The collected tax will be used to solidify, diversify and ensure the nation’s economic development.

The introduction of Excise Tax

As per the Federal Tax Authority, UAE, Excise Tax will be effective in the fourth quarter of 2017 and was accounted to be applied from the 1st October, 2017.

Initial statistics show that the authority expects 250 entities to file excise tax returns, adding that the filing process will be done voluntarily by the taxed entities, but the authority - by law- reserves the right to examine and/ or audit any tax statement, if needed.

Registration procedure

-Businesses are required to register for excise tax before October 1, 2017.

-The excise registration form is available on FTA’s e-service portal:

-The FTA will require various documents to validate the information provided by the taxpayers.

Taxed Products

Carbonated drinks (subject to excise tax at a rate of 50 percent)

- Any aerated beverage with the exception of unflavoured aerated water.

- Any concentrate, powder, gel or extract intended to be made into an aerated beverage.

Excise Tax Calculation

- Excise price should be higher than the price published by the FTA in a standard price list or the designated retail sales price of the goods without the excise tax.

The excise tax is part of an economic plan that many GCC countries adopted to diversify its sources of income after the sharp falls of the oil prices in 2014. Saudi Arabia already introduced a similar excise tax in June. 

All GCC countries agreed last year to implement a 5 percent value-added tax, starting next year. Both Saudi Arabia and the UAE have said they will implement VAT in January.

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