The United Arab Emirates (UAE) has implemented an excise tax on certain goods such as tobacco products, energy drinks, and carbonated drinks. The tax rate for these products is currently 100% of the retail price. The excise tax went into effect on October 1, 2017, and is aimed at reducing the consumption of these goods and generating revenue for the government. The tax is also implemented to reduce the burden on the country’s health care system, as the consumption of these goods is linked to various health problems.
How to calculate Excise Tax in UAE:
To calculate the excise tax on a product in the United Arab Emirates (UAE), you will need to know the retail price of the product and the applicable tax rate. The tax rate for excise tax in UAE is 100% of the retail price.
The calculation is as follows:
Excise Tax = Retail Price x Tax Rate
For example, if the retail price of a pack of cigarettes is AED 10, the excise tax would be:
Excise Tax = AED 10 x 100% = AED 10
So the final price for the consumer would be AED 10 + AED 10 = AED 20
Please note that the calculation and the rate may change depending on the product and the law update, so it’s advisable to check the latest rate before making any calculations.
Who should register for Excise Tax in the UAE?
In the United Arab Emirates (UAE), businesses that manufacture, import, store, or distribute excise goods (tobacco products, energy drinks, and carbonated drinks) are required to register for excise tax. This includes businesses that operate in the free zones as well as those that operate on the mainland.
SAB Auditing is always available to Registration for excise tax is mandatory, and businesses must register with the Federal Tax Authority (FTA) before they can begin to manufacture, import, store, or distribute excise goods. Businesses must also obtain an excise tax registration certificate from the FTA, which must be renewed annually.
In addition to registering with the FTA, businesses must also comply with other excise tax requirements such as obtaining excise tax labels, submitting excise tax returns, and paying excise tax to the FTA. They must also keep records of all transactions involving excise goods and make them available for inspection by the FTA upon request.
It’s important to note that individuals and entities that are engaged in activities related to excise goods, including but not limited to:
- Manufacturers,
- Importers,
- Wholesalers,
- Retailers,
- Storage facilities,
- Free zones operators,
- Logistics service providers,
- E-commerce platforms,
- Customs agents,
- Freight forwarders,
- Clearing agents,
- Delivery service providers,
- and anyone else involved in the supply chain of excise goods.
All of these parties must register for excise tax if they are involved in activities related to excise goods and comply with the requirements.