A Comprehensive Guide on Excise Tax Rate in UAE

The implementation of excise tax in the UAE will affect all businesses that sell specific goods, as they are required to pay the corresponding tax rate. This additional cost will then be passed on to consumers in the form of higher prices. Therefore, customers should prepare to pay more for these products once the tax goes into effect.

Furthermore, it's worth noting that businesses have a legal obligation to file taxes related to their excise tax payments with the Federal Tax Authority (FTA). In order to do so, all companies must first obtain an excise tax registration certificate. Non-compliance with the new law may result in severe penalties for businesses.

Excise Tax Rates in UAE

Distinct excise tax rates in UAE are applied to different products. Tobacco products are subject to a 100% excise tax, while carbonated beverages are subject to a 50% excise tax rate in UAE. Furthermore, electronic smoking devices and liquids have a 100% excise tax in UAE. The establishment of these rates has been approved by cabinet decision no. 52 of 2019 on excise goods, excise tax rates, and methods of calculating excise price.

Products Subjected to Excise Tax under UAE Law

Under the UAE Excise Tax Law, products deemed harmful to the environment or public health are subject to excise tax. This tax is levied on various goods, including sweetened or sugary beverages, energy drink concentrates, carbonated beverages and substances used to create aerated drinks, cigarettes, e-cigarettes, and nicotine and tobacco-free e-liquids intended for use in electronic smoking devices.

Excise Tax Levied for Companies

The implementation of the new excise tax law in the UAE will have an impact on businesses operating in the country. All excise items must be registered in the new system as part of the FTA implementation process. If your business is already registered for excise tax in UAE, you will need to update your registration information accordingly.

The registration process for excise tax in UAE will be rolled out in two phases by the FTA. The first phase will cover the registration of sweetened drinks, while the second phase will cover the registration of e-cigarettes, smoking devices, and liquids.

Conclusion

While the excise tax in UAE is a positive move, it is essential to ensure that all aspects of the tax are well understood to avoid any unforeseen financial burden. To know more about the excise tax rates in UAE, get in touch with Reyson Badger, one of the leading accounting and auditing firms in the UAE.