Excise Tax in the UAE: Everything You Need to Know

We know how you feel. Sometimes there are just too many taxes to keep track of and understand, but fortunately for you, here at Level.ae, we know and understand every tax type you could possibly think of—or can’t think of. This time around, we’re going to tackle the excise tax in UAE, and learn valuable information about this legislated tax.

First thing’s first. What is an excise tax, exactly?

An excise tax is primarily a business tax, separate from other taxes. It is a legislated tax on certain goods or services, such as alcohol, tobacco, and energy drinks, just to name a few. Excise taxes are taxes imposed by state and local governments, and these types of taxes differ in each country, as opposed to being an imposed, international tax. 

If firms are selling goods that require excise tax, businesses and companies must file a special form and make quarterly payments. Depending on the country, consumers may or may not see excise taxes on products. Sometimes, merchants or businesses pay the excise tax in full, but with some products, the excise tax can end up being paid by clients.

Apart from alcohol and tobacco, excise tax also applies to fuel sales or airline ticket sales. Even though income tax and VAT are the primary revenue generators for governments, excise taxes also play a significant role.

If it still sounds confusing, feel free to reach out and we can offer you a more detailed explanation and a step-by-step guide to excise taxes.

How does excise tax work in the UAE? 

Excise tax was first introduced in the UAE in 2017, and more than 1,700 products were taxed accordingly. These products included carbonated drinks, tobacco, and energy drinks. 

One of the main scopes of excise taxes is to tax products that are harmful and that can create health problems. By introducing the excise tax, the UAE automatically started a health initiative to lower the consumption of unhealthy products and encourage citizens to adopt a healthier lifestyle.

Although it worked to some extent, business is still booming when it comes to tobacco, alcohol, and energy drinks. Tobacco, energy drinks, and carbonated drinks have an excise duty of 100%, 100%, and 50%, respectively. Furthermore, in December 2019, the UAE government also imposed a 100% excise duty on electronic smoking devices and liquids used for these devices. 

How does excise tax affect businesses in the UAE?

So, when exactly are businesses taxed? Essentially when these goods enter production or at the time of importing. Sometimes, businesses and manufacturers pay the tax when the specific goods are released for consumption.

Firms can register online for excise tax on the FTA website. For more details about excise tax registration, please read the registration user guide or ask us for assistance.

How can Level.ae help you register?

Registering for taxes is tedious work, no matter what kind of taxes we’re talking about, and so is tax implementation. Level Tax agents can help your company with tax implementation, and we provide extensive guidance on excise tax registration, procedural formalities, and documents required for the entire procedure.

We can also assist in keeping you up-to-date on the latest excise tax changes, goods and product classification, and more. If you need any assistance when it comes to registering for an excise tax, feel free to reach out to our experts.

 

 

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