Introduced to curb the consumption of harmful goods, excise tax in the UAE applies to products like tobacco, energy drinks, and sugary beverages.
If your business imports, manufactures, or distributes these items, understanding how excise tax works isn’t optional, it’s essential for staying compliant and avoiding steep penalties.
This guide breaks down everything you need to know.
Introduced in October 2017 under Federal Decree‑Law No. 7 of 2017 (effective from December 1, 2019), the UAE’s excise tax is an indirect tax applied once at the point of manufacture or import not at the retail level
Its core purpose? Discourage consumption of unhealthy goods and generate revenue for public welfare and health initiatives
Product Category | Tax Rate |
Tobacco & tobacco products | 100% of price |
Energy drinks | 100% of price |
Electronic smoking devices & e-liquids | 100% |
Carbonated drinks | 50% of price |
Sweetened beverages (e.g. sugary drinks) | 50% of price |
Standard excise rates include 100% on tobacco, electronic smoking devices, and energy drinks; 50% on carbonated and sweetened beverages
If your business imports, produces, stockpiles, or distributes any excise goods in UAE, you’re required to:
Penalties can be steep:
The Exemptions & Relief Options you need to know:
Certain goods and scenarios qualify for exemptions:
The scope of excise tax has widened to include all sweetened beverages whether naturally or artificially sweetened along with electronic smoking devices and vaping liquids. This update affects a larger group of businesses, especially in the beverage, wellness, and retail sectors, making it critical to review your product list and update your compliance strategy accordingly.
Starting July 1, 2025, businesses that store excise goods in FTA-designated warehouses must report any natural shortages such as spillage, leakage, or evaporation through a newly introduced official form. This reporting requirement ensures accurate stock reconciliation and improved transparency in warehouse operations. Failure to comply may result in penalties or denied claims.
The Federal Tax Authority (FTA) has enhanced its EmaraTax platform with better tools for filing, real-time compliance alerts, and integration with UAE customs. These upgrades aim to streamline the tax process, reduce manual errors, and help businesses meet their obligations more efficiently. Adopting these digital solutions is key to staying audit-ready.
The FTA has introduced tougher penalties for non-compliance, including steeper fines for late registrations, missed filings, and inaccurate declarations. In addition, accumulating interest on unpaid tax liabilities may apply. Businesses are now expected to stay ahead of deadlines and maintain accurate, up-to-date documentation to avoid financial and legal repercussions.
UAE’s latest tax reforms such as the introduction of the Domestic Minimum Top-Up Tax (DMTT) signal a strong move toward international compliance standards. These changes promote transparency and align the country with OECD global tax frameworks. Businesses operating internationally should assess their structures and reporting to ensure alignment with evolving global norms.
Category | Excise Tax | VAT (Value Added Tax) |
Purpose | Aims to reduce consumption of harmful goods like tobacco and sugary drinks | Broad-based tax to generate revenue on most goods and services |
Applies To | Specific products: tobacco, energy drinks, electronic smoking devices, etc. | Nearly all goods and services except exemptions and zero-rated items |
When It’s Charged | One-time tax at production or import stage | Applied at every stage of the supply chain from manufacturer to end user |
Tax Rate | High: 50% or 100% depending on product category | Standard rate of 5% across taxable goods and services |
Who Must Register | Businesses producing, importing, or storing excise goods | Businesses with taxable supplies over AED 375,000 annually |
Return Filing | Returns filed monthly or quarterly; deadline is the 15th of the following month | Returns filed monthly or quarterly; deadline is the 28th of the following month |
Main Goal | Influence consumer behavior and improve public health | General revenue generation to support government expenditure |
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