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Excise tax

UAE Excise Tax

The purpose of the excise tax is to reduce the consumption of goods linked to unhealthy practices, in the UAE case: carbonated drinks, energy drinks and tobacco.

Excise tax regimes

Carbonated Drinks50%
Energy Drinks100%
Tobacco100%

How to calculate the excise tax?

Specific method: the specific method is straightforward and involves applying a fixed tax rate per unit of a particular product. For instance, cigarettes incur an excise tax of AED 0.4 per cigarette, while energy drinks are taxed at AED 0.1 per milliliter. This method offers clarity for businesses and consumers, ensuring that the tax amount remains predictable and easy to administer.

Ad-valorem method: in contrast, the ad valorem method calculates excise tax based on the value of the product. Luxury cars, for instance, are taxed at a rate of 50% of their retail price, while jewelry faces a 5% tax on its retail value. The ad valorem method is more complex, requiring a valuation of the product to determine the taxable amount accurately. This method is typically applied to goods where value fluctuates significantly.

Who needs to register for excise tax?

  • Manufacturer of excise goods;
  • Importer of excise goods;
  • Stockpilers of excise goods;
  • Warehouse managers responsible for excise goods.

Scope of the excise tax

  • Importing excise products
  • Producing excise products out of a Designated Zone;
  • Stockpiling excise goods in the normal course of business;
  • Selling excise goods in the UAE. The excise tax will be borne by the seller and the tax amount will be included in the total sale price of the excise product.

If you require assessment of specific cases requiring excise tax calculations please don't hesitate to contact our team.

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