Understanding Excise Tax in the United Arab Emirates

What is an excise tax?
An excise tax is an indirect tax imposed on the sale of a particular commodity. These goods are taxable if they are imported into the UAE, manufactured in the UAE, or stockpiled in the UAE. 

Excise tax is levied on products that are harmful to people or the environment. The primary purpose of the excise tax is to reduce the consumption of those particular goods to restrict unhealthy practices.

In certain scenarios, goods will be physically labeled to show that the excise tax has already been paid to the government. 

Which products are subject to excise tax?

• Carbonated drinks: All aerated beverages except for unflavored aerated water. Products used for making aerated beverages, including concentrates, powders, gels, and extracts will also be considered excise goods.

• Tobacco and tobacco products

• Energy Drinks: Certain beverages include energizers which provide mental and physical stimulation, such as caffeine, taurine, ginseng, and guarana. Any concentrate, powder, gel, or extract that is made into an energy drink is also subject to excise tax.

Scope of excise tax
A person must register and pay excise tax if they are involved in the following activities:

• Importing excise products.
• Producing or manufacturing excise goods.
• Transferring excise products out of a Designated Zone
• Stockpiling excise goods in the normal course of business.
• Selling excise goods in the UAE. The excise tax will be borne by the seller and the tax amount will be included in the total sale price of the excise product.

Click here to read more on excise tax registration.