To curb the harmful consumption patterns and enhance the standard of living are the leading objectives behind the Cabinet’s decision to expand the scope of excise tax UAE.
After coming into effect, consumers who wish to purchase excise goods will be required to pay excise tax, in addition to VAT. Producers, importers and stockpiles of excise goods have to be registered according to the new system.
What Products exempt from Excise Tax?
- Ready to drink beverages containing at least 75% milk
- Ready to drink beverages containing at least 75% milk substitutes
- Baby formula or baby food
- Beverages consumed for special dietary needs, as determined under the heading ‘General Requirements for Pre-packaged Foods for Special Dietary Use’ and any subsequent and relevant standards.
- Beverages consumed for medical uses, under the heading ‘General Requirements for Handling of Foods for Special Medical Purposes’, and any subsequent and relevant standards.
The UAE Cabinet announced the decision to expand the list of excise taxable products to include sweetened beverages, sugary drinks and electronic smoking devices, starting from January 1, 2020.
You may be interested in: Requirements of Registering Excise Tax
When do the new tax rates take effect?
The new excise tax rates will come into effect from Jan 1, 2020, are as follows
|Electronic cigarettes with or without nicotine||100%|
|Liquids used in electronic cigarettes||100%|
|Beverages with added sugar||50%|
The Authority asserted that the new decision is part of the government’s continuous efforts to promote healthy lifestyles in the UAE community and curb the spread of diseases stemming from the consumption of harmful goods.
As part of the first phase of implementation, the FTA has called on producers, importers, and stockpilers of sweetened drinks with added sugar to start registering excise tax in UAE purposes through the new registration procedure.
Find more info: Penalties Imposed for Breaching Excise Law in UAE
The FTA’s registration procedure for excise tax will be divided into two phases:
- The first phase will be on registration of tax on sweetened drinks
- The second will be for registration of electronic smoking devices and liquids used in the devices.
To avoid last-minute registration delays, the Federal Tax Authority has already launched a new excise tax registration process for businesses likely to be affected by the expanded coverage of excise tax and recommends that businesses promptly commence their registration.
Implementing Excise Tax at a rate of 50% on carbonated drinks and 100% on tobacco products and energy drinks has been a great success. This success has been made evident by the high rates of compliance among businesses, facilitated by a simple and transparent approach. This decision has also witnessed many noticeable positive outcomes, indicating that the objectives for which Excise Tax was introduced have been largely met.
Any business in the UAE dealing with excisable goods should check if they need to be registered with the FTA and is required to file and pay excise tax. It is the responsibility of businesses to ensure that all regulatory requirements pertinent to excise tax are in place.
If you have questions regarding excise tax registration process, don’t hesitate to contact our VAT consultant in Dubai UAE us today!