It is an indirect tax that is imposed by the government on certain commodities that are considered unhealthy or polluting to the planet. They are referred to as Targeted Goods. In 2017, the FTA launched the UAE Excise Tax to prevent the use of unhealthy products and increase the amount of revenue paid to the government to finance government services.
The same is primarily applicable to tobacco products, electronic smokers, soft drinks, and energy drinks. Taxing these products makes the UAE government encourage healthier decisions and environmental concerns without losing a necessary source of public revenue.
It applies to the businesses that are engaged in production, importing, keeping, or the disposal of excise goods in UAE. The entities to be registered by FTA include the following:
Provided that your business deals with tobacco or sells e-cigarettes or carbonated drinks, you can be legally registered to do the same in Dubai and in the UAE.
A Tax Registration Number (TRN) will be issued to you once you are approved. You will have to submit regular monthly returns, pay up taxes and ensure that you abide by the FTA regulations.
Lack of adherence to UAE excise tax laws may lead to significant financial and legal penalties, including:
In order to evade punishment it is highly recommended to seek professional representation in Dubai like Farahat and Co. so that there is correct compliance.
The law of Federal Excise duty is a legal tool which is enacted through the legislation of UAE. It specifies exxtice goods, applicable rates, exemptions and compliance requirements. The legislation defines it as an indirect kind of levy and this is levied at the stage of production or importation instead of being levied directly on the consumers.
Certain Designated Zones in the UAE can receive the exemptions of the excise, based on the specific business and storage facility. Those companies that work in these zones are required to keep a record that shows compliance.
The portal makes the whole process of registration easier:
Upon this approval, your business will be registered as an Excise Tax in the UAE. It is also important to keep your account up to date and make proper returns in good time. Need help registering? FTA registration can be done by our professionals.
In order to compute, the retail selling price, import value, or production cost (whichever higher) are to be applied to the relevant rate.
Example:
Suppose an organization also imported the energy drink of the import price of AED 10 per can and the rate is 100,
the Excise Tax = AED 10 x 100% = AED 10 per can.
Therefore, the post-tax retail price will be AED 20.
| Product Category | Rate |
|---|---|
| Carbonated Drinks | 50% |
| Energy Drinks | 100% |
| Tobacco and Tobacco Products | 100% |
| Electronic Smoking Devices and Tools | 100% |
| E-liquids Used in Vapes | 100% |
| Sugar-Sweetened Drinks | 50% |
The FTA uses a tiered volumetric model to determine tax based on product quantity or sugar content.
To calculate the amount, apply the relevant rate to the retail selling price, import value, or production cost, whichever is higher.
Example:
If a company imports an energy drink with an import value of AED 10 per can and the rate is 100%,
the Excise Tax = AED 10 × 100% = AED 10 per can.
Thus, the retail price after tax becomes AED 20.
Businesses must provide:
Registered businesses must also collect and pay due taxes, submit monthly returns, and maintain detailed records for audit purposes.
Businesses that produce, import, or stockpile excise goods in the UAE must register with the FTA.
Trade license, Emirates ID, passport copy, customs number, bank details, and incorporation documents.
Through the FTA portal by creating an account, filling in details, and submitting required documents.
A TRN is a unique number assigned by the FTA after successful registration.
Yes, businesses operating in approved Designated Zones may receive exemptions under strict FTA regulations.
By filing monthly returns, paying taxes on time, maintaining records, and ensuring all goods have proper documentation.
Contact farahatco.com today and get your business registered today.