Excise Tax in the UAE

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Excise Tax in the UAE

Excise tax in the UAE is a form of indirect taxation imposed on specific goods that are considered harmful to health or the environment. It was introduced in 2017 as part of the UAE's commitment to diversifying its revenue sources. Excise tax helps in regulating the consumption of these goods while generating revenue for the government.

At Shuraa Tax, we offer expert advice and comprehensive tax services, including excise tax compliance for businesses in the UAE.

What is Excise Tax in the UAE?

Excise tax is levied on certain products that are harmful to human health or the environment. The purpose of the tax is not only to generate revenue but also to discourage the consumption of products like tobacco, sugary drinks, and energy drinks. UAE Excise tax is separate from VAT (Value Added Tax), and it is applied at the point of importation or production.

Goods Subject to Excise Tax in the UAE

The following goods are subject to UAE excise tax:

Tobacco products: Cigarettes, cigars, and other tobacco-related products.
Energy drinks: All types of energy drinks are subject to excise tax.
Sweetened beverages: Drinks with added sugar, including sodas, juices, and flavoured water.
Electronic smoking devices: Vapes and related products.
Carbonated drinks: Any carbonated drinks containing sugar or sweeteners.

Exemptions from Sweetened Drink Tax

While most sweetened drinks are subject to excise tax, certain beverages are exempted from the tax. These exemptions typically apply to:

Fruit Juices: Natural fruit juices without added sugars or sweeteners.
Diet Drinks: Drinks that are marketed as sugar-free or contain no calories.
Milk and Dairy Products: Beverages made from milk, such as milkshakes and dairy-based drinks.

Excise Tax Rates in the UAE

Excise tax rates in the UAE are structured based on the product's harmfulness. Below are the current excise tax rates:

50%: Carbonated drinks (sodas, soft drinks, energy drinks).

100%: Tobacco products, including cigarettes, cigars, and e-cigarettes.

50%: Sweetened beverages, including all drinks with added sugar.

100%: Electronic smoking devices and liquids.

Comparison of Excise Tax vs VAT in the UAE

Many businesses confuse excise tax with VAT due to both being forms of consumption tax. However, they differ in scope and application. Below is a detailed comparison:

Feature	Excise Tax	VAT
Purpose	Discourages consumption of harmful goods	Generates revenue from the general consumption of goods and services
Rate	Higher rates for harmful goods (50%-100%)	Standard rate of 5% (or 0% for specific items)
Scope	Specific goods only (e.g., tobacco, sugary drinks, etc.)	Applies to most goods and services
Point of Application	Applied at the point of production or importation	Applied at the point of sale or transaction
Exemptions	Limited exemptions based on product category	Several exemptions, including essential items like basic food, healthcare, and education services

UAE Excise Tax Calculation Example

Here’s an example to understand excise tax calculation:

Product: A pack of cigarettes worth AED 100.

Excise Tax: 100% excise tax rate applies to tobacco products.

Calculation:

Excise tax = AED 100 × 100% = AED 100

Total price = AED 100 (product price) + AED 100 (excise tax) = AED 200

So, the total price including excise tax for a pack of cigarettes would be AED 200.

Excise Tax Registration in the UAE

Excise tax registration is mandatory for businesses that produce or import excise goods in the UAE. Businesses must register with the Federal Tax Authority (FTA) to comply with excise tax regulations. The registration process involves several steps:

1. Create an Account

2. Submit Documentation

Provide required documents such as your trade license, proof of business address, and other relevant paperwork.

3. Complete Application

Submit the excise tax registration application.

4. Receive TRN

After registration, your business will receive a Tax Registration Number (TRN), which must be included in all excise tax-related documents.

How Shuraa Tax Can Help with Excise Tax in the UAE

At Shuraa Tax, we specialize in excise tax advisory services. Our team of tax experts will ensure your business complies with the regulations set by the UAE government. We assist with:

Excise Tax Registration

We will assist with the registration process, ensuring all necessary documents are submitted.

Excise Tax Compliance

We will guide you on maintaining compliance with ongoing excise tax obligations.

Filing Excise Tax Returns

We will handle the timely and accurate filing of your excise tax returns with the FTA.

Tax Advisory

Our team will offer expert advice on minimizing your excise tax liabilities, helping you optimize your business operations.

Shuraa Taxation Services in the UAE

We offer comprehensive taxation services in the UAE, including:

Excise Tax Services: Registration, filing, and compliance for excise goods.
VAT Registration and Compliance: Assistance with VAT registration and returns.
Tax Residency Certificate: Helping businesses and individuals obtain tax residency certificates.
Payroll Services: Streamlined payroll solutions ensuring legal compliance.
Bookkeeping and Accounting: Accurate financial recordkeeping and accounting services.
Corporate Tax Advisory: Expert guidance on tax planning and structuring.
Corporate Tax Registration: Assisting businesses with corporate tax registration and comply with new regulations.
Corporate Tax Filing: Helping businesses with corporate tax return filing accurately and on time.
Tax Audits: Thorough audits to ensure your tax filings are accurate.
Tax Dispute Resolution: Professional support in resolving tax disputes with the FTA.

Why Choose Shuraa?

Extensive years of experience in providing tax services.
A team of qualified and certified accountants, auditors, and tax experts.
Customized tax solutions for your business’s unique needs.
From registration to compliance, we provide end-to-end services.

Get in Touch with Shuraa Tax

If you’re dealing with excise goods and need help understanding or managing excise tax, contact Shuraa Tax. Our team is ready to assist you with all aspects of excise tax compliance, registration, filing, and advisory services.

Get Free Consultation

Frequently Asked Questions

Goods subject to excise duty in UAE include tobacco products, energy drinks, carbonated drinks with added sugar or sweeteners, sweetened drinks, and electronic smoking devices. Certain food and drink items, like natural fruit juices and milk, may exempt from the tax.

Excise tax is a consumption tax imposed on goods harmful to health or the environment, like tobacco, sugary drinks, and energy drinks. Businesses involved in these goods must comply with registration, filing, and payment obligations set by the Federal Tax Authority (FTA).

The UAE excise tax rate is 50% for carbonated and sweetened drinks and 100% for tobacco, energy drinks, and e-cigarettes.

Non-compliance can lead to fines, penalties, and interest from the FTA. It may also result in audits or legal actions.

Shuraa Tax offers support with excise tax registration, filing, calculations, and compliance. We help identify exemptions and manage tax liabilities efficiently.