- with Finance and Tax Executives
Ministerial Decision No. 249 of 2025 – Smoking-Cessation Products
Effective Date: 1 October 2025
Details:
The Ministry of Finance issued Ministerial Decision No. 249 of
2025, excluding nicotine-based smoking cessation products from the
definition of tobacco and tobacco products under Cabinet Decision
No. 52 of 2019 on Excise Goods, Excise Tax Rates, and Price
Calculation Methods
Key Provisions:
- Products falling under specific HS Codes within Chapter 24(including nicotine gum, tablets, patches, sprays, nose drops, and injections) are expressly excluded from "tobacco and tobacco products."
- Such items are therefore not subject to Excise Tax from the effective date.
- All conflicting provisions in earlier regulations are repealed.
Impact:
This Decision aligns the Excise framework with public health objectives by distinguishing therapeutic nicotine products from taxable tobacco goods. It reduces compliance burdens for pharmaceutical suppliers and importers of cessation aids.
Compliance Tips:
- Review product classification to ensure alignment with the listed HS codes.
- Confirm customs declarations accurately reflect the exempt product status from 1 October 2025.
- Retain product documentation evidencing medicinal purpose and packaging compliance.
Applicability:
Applies to manufacturers, importers, and distributors of nicotine replacement and smoking cessation products.
Businesses should update customs and tax configurations to reflect exemption eligibility and ensure excise returns exclude such products from 1 October 2025 onward.
FTA Public Clarification EXTP012 – Transition to a Tiered-Volumetric Model for Sweetened Drinks
Effective Date: Expected 1 January 2026
Details:
FTA Public Clarification EXTP012 introduces a significant reform to
the Excise Tax regime for sweetened drinks, moving from the current
ad-valorem model to a tiered-volumetric structure based on sugar
content.
Key Provisions:
- Excise Tax will be determined according to total sugar content (natural, added, or other sweeteners) per 100 ml.
- The model introduces the following tiers:
-
- High-sugar drinks: ≥ 8 g/100 ml
- Moderate-sugar drinks: ≥ 5 g and < 8 g/100 ml
- Low-sugar drinks: < 5 g/100 ml
- Artificially sweetened only: 0% rate
- The FTA will require laboratory sugar-content reports as part of Excise registration.
Impact:
The new regime encourages product reformulation and improves alignment with international public health standards. It will materially impact pricing, tax planning, and labelling processes for beverage manufacturers and importers.
Compliance Tips:
- Begin obtaining laboratory analyses of product sugar content to prepare for registration compliance.
- Update internal Excise systems and price models to align with volumetric tax calculations.
- Reassess inventory and procurement processes before 1 January 2026 to ensure proper classification under the new rate structure.
Applicability:
Applies to manufacturers, importers, and distributors of sweetened
beverages in the UAE.
Entities should proactively classify their product range under the proposed sugar tiers, maintain supporting laboratory reports, and prepare to transition to the volumetric Excise Tax model by early 2026..
FTA Public Clarification CTP008 – Corporate Tax Treatment of Family Wealth Management Structures
Details:
The Federal Tax Authority (FTA) issued Public Clarification CTP008
to provide guidance on the Corporate Tax implications of family
wealth management structures, including Family Foundations, Family
Offices, Holding Companies, and Special Purpose Vehicles
(SPVs).
This Clarification interprets Article 17 of Federal Decree-Law No. 47 of 2022 and Ministerial Decision No. 261 of 2024, clarifying when such entities may be treated as tax transparent and when they will be considered Taxable Persons under the Corporate Tax Law.
Key Provisions:
- Family Foundations or Trusts may apply to the FTA to be treated as tax transparent if they meet the conditions of Article 17(1) of the Corporate Tax Law.
- A Family Office (SFO/MFO) with separate legal personality that does not meet Article 17 criteria is considered a Taxable Person, subject to Corporate Tax on its income, including management fees.
- A Family Office operating in a Free Zone may benefit from the 0% rate on qualifying income derived from regulated fund or wealth management activities.
- Family Members are not subject to Corporate Tax on income derived from family wealth vehicles where such income constitutes personal investment or real estate investment income.
Impact:
This clarification offers certainty for families managing wealth
through multiple vehicles. It distinguishes between tax-transparent
entities and taxable ones, ensuring alignment with regulatory
oversight. Family Offices in Free Zones now have defined
eligibility for 0% treatment, while unregulated or purely advisory
structures remain taxable.
Compliance Tips:
- Review existing family structures to confirm whether they meet the conditions of Article 17 for tax transparency.
- Where multiple layers of holding or SPVs exist, confirm ownership continuity and transparency status.
- For regulated entities, ensure ongoing compliance with the DFSA, FSRA, or Central Bank oversight to retain "qualifying activity" status.
- Maintain contemporaneous documentation demonstrating arm's-length pricing for intra-family management services.
Applicability:
This clarification applies to Family Offices, Foundations, and SPVs
managing private wealth within or from the UAE.
FTA Public Clarification CTP009 – Application of Transitional Rules (Ministerial Decision No. 120 of 2023)
Details:
FTA Public Clarification CTP009 clarifies the methodology for applying transitional rules concerning Qualifying Immovable Property held before the Corporate Tax effective date. It elaborates on valuation methods available to real estate developers under Ministerial Decision No. 120 of 2023, ensuring consistency in determining the non-taxable portion of pre-CT gains.
Key Provisions:
- Developers may elect to exclude gains realised on disposals of qualifying immovable property, using the difference between market value at the beginning of the first tax period and the higher of cost or net book value.
- Applies to ongoing and off-plan projects recognised under IFRS 15 as of the effective date.
- The valuation must be performed by an accredited and competent valuer approved by the relevant authority.
- Once made, the election is irrevocable, except under special circumstances approved by the FTA.
Impact:
The Clarification provides essential clarity for developers on the transitional treatment of pre-CT property gains. It ensures consistent application of the valuation-based exemption and mitigates the risk of disputes regarding inclusion of historical appreciation.
Compliance Tips:
- Engage an accredited valuer early to determine the market value at the start of the first tax period.
- Maintain records supporting both valuation and cost base to justify excluded amounts.
- Document the election formally and ensure internal accounting systems reflect the chosen valuation method.
Applicability:
Applies to real estate developers and property-owning entities holding immovable property before their CT effective date.
VAT Guide – Input Tax Apportionment and Special Methods
Details:
The FTA released an updated VAT Guide on Input Tax Apportionment, replacing earlier guidance on mixed-use and residual input tax recovery. The document provides detailed instructions on calculating input tax recovery where taxable and exempt activities coexist, and on applying for special methods or specified recovery percentages ("SRP").
Key Provisions:
- Defines standard and special apportionment methods, including outputs-based, transaction count, floor-space, and sectoral approaches.
- Clarifies annual adjustment requirements and conditions for applying SRP.
- Introduces procedural requirements for FTA approval, renewal, and withdrawal of special method authorisations.
- Emphasises the need for accurate record-keeping and fair allocation principles consistent with Article 55 of the VAT Law.
Impact:
The guide enhances certainty for taxpayers engaged in both taxable and exempt supplies, promoting consistent recovery treatment and reducing interpretative disputes with the FTA.
Compliance Tips:
- Reassess recovery calculations and ensure consistency with the updated guidance.
- Where the standard method materially distorts recovery, consider applying for a special method or SRP.
- Prepare documentation supporting the rationale and quantitative basis for the selected method.
- Implement periodic reviews and annual reconciliations to align with the guide's requirements.
Applicability:
Applicable to all VAT-registered businesses making both taxable and exempt supplies.
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.
