Excise Tax in the United Arab Emirates: understanding the surcharge on harmful products

The United Arab Emirates imposes specific taxation on certain products considered harmful to health or the environment. This tax, known as Excise Tax, is often unknown to both entrepreneurs and consumers, although it can represent a significant cost when importing or marketing certain goods.

In the video above, we explain the essential principles of this surcharge. This article reviews the key points to know in order to understand its scope and economic impact.

What is the Excise Tax in the United Arab Emirates?

In the video above, we explain the essential principles of this surcharge. This article reviews the key points to know in order to understand its scope and economic impact.

Which products are subject to the Excise Tax?

In the United Arab Emirates, the Excise Tax applies specifically to:

tobacco and all derivative products,
electronic cigarettes,
liquids for electronic cigarettes,
energy drinks,
sugary or heavily sweetened beverages.

These categories may evolve based on decisions by the Federal Tax Authority (FTA), but the principle remains the same: any product with a negative impact on health or the environment may be subject to this surcharge.

What is the surcharge rate applied?

The Excise Tax rate generally ranges from 50% to 100% depending on the type of product.

This taxation can therefore double the cost of a product even before the application of VAT or commercial margins.

The objective is not only fiscal: the Excise Tax also aims to limit consumption, encourage more responsible behavior, and reduce the import of harmful products.

It is important to note that this surcharge is not a customs duty. It is an internal Emirati tax, calculated independently of any potential customs fees.

Why is this tax important for businesses?

Any business that imports, manufactures, or markets products subject to the Excise Tax must:

register with the Federal Tax Authority,
declare the relevant volumes,
pay the surcharge before the product is circulated.

Failing to comply with these obligations can lead to significant penalties, notably customs or logistical blockages.

This tax should therefore be incorporated upfront into the business model, pricing calculations, and margin forecasts.

Conclusion

The Excise Tax is an important component of the taxation system in the United Arab Emirates. It applies to high-risk products and can reach up to 100% of their value. For distribution, import, or e-commerce companies, it is essential to understand this surcharge, to check whether the products they sell are subject to it, and to correctly integrate its impact into their pricing strategy.

A good understanding of this regulation helps to avoid costly mistakes and ensures full compliance when importing or marketing.

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