Laws and Regulations

The decision to broaden the range of Excise Goods, including sweetened drinks, electronic smoking devices, and liquids, aligns with the leadership's commitment to fostering a safe and healthy society. The expansion aims to curb the consumption of harmful products, prevent societal damage, and address health issues caused by detrimental consumption habits. Three years post-implementation, positive outcomes are evident, with companies adapting production processes, leading to increased availability of unsweetened beverages. This shift contributes to improved community health by reducing obesity, diabetes, and other diseases linked to excessive sugar intake. The business sectors' cooperation in adhering to Excise Tax requirements is facilitated by the Federal Tax Authority's user-friendly processes, allowing taxpayers to submit returns and pay taxes seamlessly through the eServices portal. This approach fosters tax awareness and creates an environment encouraging businesses to comply with tax obligations.

Legislative Framework

The Federal Tax Authority has actively enhanced the legislative framework for Excise Tax, issuing numerous laws, decisions, and informative materials. This comprehensive approach encompasses 21 legislations specific to Excise Tax, along with other tax procedures, 12 Public Clarifications, 107 Private Clarifications, and 30 Guides on Excise Tax. In tandem, the electronic system underwent improvements, ensuring accuracy in registering Excise Goods and associated details, with clear standards outlined. Businesses were encouraged to adhere to updated procedures for registration, facilitating smoother processes. Continuous development of monitoring and control tools, utilizing advanced digital technologies, has bolstered tax compliance and inspection efficiency. The implementation of Digital Tax Stamps on tobacco and tobacco products, in line with Cabinet decisions, establishes a robust framework for tax collection, combatting evasion, and ensuring conformity to standards. These stamps enable electronic tracking from production to consumer. The phased implementation started in 2019, covering various tobacco products, and expanded to include waterpipe tobacco and electronically heated cigarettes. Non-compliant products were prohibited from local markets in 2021. Further advancements were made with the introduction of redesigned Digital Tax Stamps from October 2021 and January 2022 for all cigarette and tobacco product packages in the UAE.

Calculation Instance of Excise Tax in the UAE

In the UAE, suppose a pack of cigarettes is priced at AED 20 at a store. Under the Specified tax method, the excise cost for the cigarettes amounts to AED 20 plus an additional AED 8, totaling AED 28. For an energy drink, using the Ad Valorem tax system, if the retail price is AED 10, the excise cost would be AED 10 plus 100% of AED 10, resulting in AED 20. Applying the ad valorem tax method to a carbonated drink with a suggested retail price of AED 5, the excise cost would be AED 5 plus 50% of AED 5, equating to AED 7.5.

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