What is an excise tax?
Excise Tax is an indirect tax imposed on the sale of specific goods. These goods become taxable when they are imported into the UAE, manufactured within the UAE, or stockpiled in the UAE under certain conditions.
The tax applies to products considered harmful to human health or the environment. The primary objective of Excise Tax is to reduce the consumption of such goods and discourage unhealthy or environmentally harmful practices.
In certain cases, excise goods are physically marked or labeled to indicate that Excise Tax has already been paid to the government. This labeling system helps authorities monitor compliance and prevent tax evasion.
Which products are subject to excise tax?
- Carbonated Beverages: All carbonated drinks except unflavoured carbonated water. Products used in the production of aerated beverages, including concentrates, powders, gels, and extracts, are also subject to Excise Tax.
- Tobacco and Tobacco Products: All tobacco products intended for consumption are subject to Excise Tax in accordance with UAE regulations.
- Energy Drinks: Beverages containing stimulant substances such as caffeine, taurine, ginseng, and guarana that provide mental and physical stimulation. Concentrates, powders, gels, or extracts used to produce energy drinks are also subject to Excise Tax.
Scope of excise tax
When Are You Required to Register and Pay Excise Tax?
Businesses must register for and pay Excise Tax if they engage in any of the following activities in the UAE:
- Importing excise goods into the UAE.
- Producing or manufacturing excise goods within the UAE.
- Removing excise goods from designated zones into the local market.
- Stockpiling excise goods in the ordinary course of business (in specified cases).
- Selling excise goods within the United Arab Emirates.
Excise Tax is the responsibility of the registered person (typically the importer, producer, or stockpiler). The tax amount is generally included in the final sales price of the excise goods.
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