The UAE Cabinet in an attempt to discourage use of sweetened beverages and smoking habits of the public introduced new Excise Law regime according to which UAE would apply 50% Excise Tax on Sugar Sweetened Beverages (SSB) as well as 100% excise duty on electronic smoking devices and equipment and its associated parts such as the liquid used therein. The decision is contained in Cabinet Decision Number 52 of 2019 on Excise Goods, Excise Tax Rates and the Methods of Calculating the Excise Price. This decision came into force on December 1, 2019.
The new excise tax shall apply on the above mentioned two products in following manner
- The excise duty/tax of 50% shall be levied on any product that contains sweeteners or added sugar either in concentrate or beverages, powder or other substance that is mixed with water to be made into a beverage.
- The excise tax/duty of 100% would also be levied on every electronic smoking devices and equipment despite they contain any trace of tobacco or nicotine or liquid used in such devices.
- These two goods are included in the existing list of goods such as tobacco products, energy drinks and carbonated drinks on which excise duty is applicable.
According to the law, tax shall be applicable on the following Excise Goods:
- 100% rate of excise tax on tobacco and tobacco products;
- 100% rate of excise tax on liquids used in electronic smoking devices and tools;
- 100% rate of excise tax on electronic smoking devices and tools;
- 50% rate of excise tax on carbonated drinks;
- 100% rate of excise tax on energy drinks;
- 50% rate of excise tax on sweetened drinks.
The Federal Tax Authority (FTA) has designed new procedure for registration of these two classes of products and sub-classes under them and calculating the excise tax related to these. The new regime shall be although in tandem with Federal Decree Law Number 7 of 2017 on Excise Tax which is the parent legislation for the excise tax in UAE.
Through introduction of excise tax on these commodities, the Government aims to shift negative externalities associated with human health and environment in consumption of such harmful commodities.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.