Two years after excise tax was introduced, the UAE is widening its scope. From 1 January 2020, two new categories of goods will become excise goods:
| Goods | Rate |
|---|---|
| Sweetened drinks | 50% |
| Electronic smoking devices and tools | 100% |
| Liquids used in electronic smoking devices | 100% |
These sit alongside the existing rates of 100% on tobacco products and energy drinks, and 50% on carbonated drinks.
What counts as a sweetened drink
Broadly, a sweetened drink is any product with added sugar or other sweeteners that is ready to drink, or that is a concentrate, powder or extract which can be made into a drink. Some products, such as certain milk-based drinks, infant formula and drinks for special dietary or medical use, are excluded. The definitions are detailed, so producers and importers should check each product carefully.
Who is affected
- Importers and producers of these goods will need to register for excise tax if they are not already registered.
- Stockpilers may also have obligations.
- Retailers and distributors are likely to see price changes from suppliers, and should prepare for them.
What to do before January
- Review your product range to identify which items become excise goods.
- Register with the Federal Tax Authority if you will import or produce them.
- Register your products and their prices with the FTA as required.
- Update your systems so excise tax is calculated correctly, and VAT is then charged on the excise-inclusive price.
- Review your pricing and communicate any changes to customers in good time.
With only a few weeks to go, businesses in the food and beverage sector should act now. We can help you assess which of your products are affected and complete the registrations needed.
This article is general information based on the rules as we understand them at the date of publication. It is not advice on your circumstances. Laws and practice change, so please speak to us before acting on it.
