A VAT audit in the UAE is a formal review conducted by the tax authorities to verify whether a business...
Excise tax in the UAE is a form of indirect taxation imposed on specific goods that are considered harmful to health or the environment. It was introduced in 2017 as part of the UAE's commitment to diversifying its revenue sources. Excise tax helps in regulating the consumption of these goods while generating revenue for the government.
At Shuraa Tax, we offer expert advice and comprehensive tax services, including excise tax compliance for businesses in the UAE.
Excise tax is levied on certain products that are harmful to human health or the environment. The purpose of the tax is not only to generate revenue but also to discourage the consumption of products like tobacco, sugary drinks, and energy drinks. UAE Excise tax is separate from VAT (Value Added Tax), and it is applied at the point of importation or production.
The following goods are subject to UAE excise tax:
While most sweetened drinks are subject to excise tax, certain beverages are exempted from the tax. These exemptions typically apply to:
Excise tax rates in the UAE are structured based on the product's harmfulness. Below are the current excise tax rates:
50%: Carbonated drinks (sodas, soft drinks, energy drinks).
100%: Tobacco products, including cigarettes, cigars, and e-cigarettes.
50%: Sweetened beverages, including all drinks with added sugar.
100%: Electronic smoking devices and liquids.
Many businesses confuse excise tax with VAT due to both being forms of consumption tax. However, they differ in scope and application. Below is a detailed comparison:
| Feature | Excise Tax | VAT |
|---|---|---|
| Purpose | Discourages consumption of harmful goods | Generates revenue from the general consumption of goods and services |
| Rate | Higher rates for harmful goods (50%-100%) | Standard rate of 5% (or 0% for specific items) |
| Scope | Specific goods only (e.g., tobacco, sugary drinks, etc.) | Applies to most goods and services |
| Point of Application | Applied at the point of production or importation | Applied at the point of sale or transaction |
| Exemptions | Limited exemptions based on product category | Several exemptions, including essential items like basic food, healthcare, and education services |
Here’s an example to understand excise tax calculation:
Product: A pack of cigarettes worth AED 100.
Excise Tax: 100% excise tax rate applies to tobacco products.
Calculation:
Excise tax = AED 100 × 100% = AED 100
Total price = AED 100 (product price) + AED 100 (excise tax) = AED 200
So, the total price including excise tax for a pack of cigarettes would be AED 200.
At Shuraa Tax, we specialize in excise tax advisory services. Our team of tax experts will ensure your business complies with the regulations set by the UAE government. We assist with:
We will assist with the registration process, ensuring all necessary documents are submitted.
We will guide you on maintaining compliance with ongoing excise tax obligations.
We will handle the timely and accurate filing of your excise tax returns with the FTA.
Our team will offer expert advice on minimizing your excise tax liabilities, helping you optimize your business operations.
We offer comprehensive taxation services in the UAE, including:
If you’re dealing with excise goods and need help understanding or managing excise tax, contact Shuraa Tax. Our team is ready to assist you with all aspects of excise tax compliance, registration, filing, and advisory services.
Contact Us Today for Expert Excise Tax Guidance!
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