Excise Tax was introduced in the UAE in October 2017 to reduce the consumption of products that negatively impact public health and the environment. This sin tax applies to tobacco products, energy drinks, electronic smoking devices, carbonated drinks, and sweetened beverages, with high tax rates of 100% or 50%, depending on the product category.

Excise tax is calculated based on the Excise Price—which includes the product cost, insurance, and freight (CIF). For example, if an energy drink has an Excise Price of AED 100, a 100% tax adds AED 100, making the total taxable value AED 200.

Businesses that manufacture, import, store, or handle excisable goods must register with the Federal Tax Authority (FTA) and file excise tax returns on time. Accurate calculation and timely submission help businesses avoid penalties and support the UAE’s long-term health and environmental goals.

Excise Tax in UAE

Excise Tax is an indirect tax imposed on goods that are harmful to human health or the environment. The goal is to discourage consumption and increase government revenue for public welfare services. 

UAE Excise Tax Overview

Start Date

Excise Tax was introduced in the UAE on October 1, 2017.

Goods Subject to Excise Tax

• Tobacco products & e-cigarettes – 100%
• Energy drinks – 100%
• Carbonated drinks – 50%
• Sweetened beverages – 50% (added in December 2019)

Purpose

The excise tax reduces the use of unhealthy goods, promotes better lifestyle choices, and generates revenue for health-related government initiatives.

Registration

Any business involved in the production, import, or storage of excisable goods must register for excise tax with the FTA and file periodic returns.

Economic Strategy

Excise tax also supports the UAE’s wider vision to diversify revenue sources and reduce reliance on oil income.

UAE Excise Tax Rates (Updated)

The UAE charges excise tax on goods harmful to public health. Below is the updated list:

Tobacco Products – 100%

This doubles the retail price and aims to lower tobacco consumption.

Energy Drinks – 100%

Includes ready-to-drink cans, concentrates, powders, and gels containing stimulants like caffeine and taurine.

Carbonated Drinks – 50%

Applies to aerated drinks except plain carbonated water. Includes powders and mixes used to make fizzy beverages.

These rates encourage healthier consumption habits across the UAE.

Examples of Excise Tax Calculation in the UAE

Specific Method Examples

1. Cigarettes

• Product: 20-pack
• Tax Rate: AED 0.4 per cigarette
• Calculation:
  20 × 0.4 = AED 8 excise tax

2. Energy Drink

• Product: 250 ml can
• Tax Rate: AED 0.1 per ml
• Calculation:
  250 × 0.1 = AED 25 excise tax

Ad Valorem Method Examples

1. Luxury Car

• Retail Price: AED 500,000
• Tax Rate: 50%
• Calculation:
  500,000 × 50% = AED 250,000 excise tax

2. Jewellery

• Retail Price: AED 10,000
• Tax Rate: 5%
• Calculation:
  10,000 × 5% = AED 500 excise tax

These examples explain how both fixed and value-based methods are applied depending on the product type.

Documents Required for Excise Tax Registration

• Passport Copy
• Emirates ID
• Trade License
• Any additional official documents supporting eligibility

Business Details Required for Registration

• Your role: Producer / importer / warehouse keeper
• Types of excisable goods handled
• Customs registration (if applicable)
• GCC TRN (if registered for excise tax in another GCC country)

Excise Tax Advisory Services in the UAE

At Proficient Accountants, we provide expert excise tax advisory services, helping businesses:

✔ Calculate excise tax accurately
✔ Register with the FTA
✔ File excise tax returns on time
✔ Avoid penalties and non-compliance
✔ Manage excisable goods under approved procedures

Our team ensures smooth, compliant, and penalty-free excise tax management for all UAE businesses.