Pay more or quit smoking as UAE introduces new taxes from Dec.1
- 30 Nov 2019
In a step to reduce consumption of unhealthy goods and modify consumers’ behaviour, the UAE Cabinet adopted a decision to expand the list of excise taxable products to include sweetened beverages, sugary drinks and electronic smoking devices, starting Dec.1, 2019.
According to a statement released by the Cabinet General Secretariat, "The decision comes to support the UAE government's efforts to enhance public health and prevent chronic diseases directly linked to sugar and tobacco consumption."
Excise tax was introduced across the UAE in 2017. Excise tax is a form of indirect tax levied on specific goods which are typically harmful to human health or the environment. These goods are referred to as “excise goods”. When considering whether a product is an excise good, the following definitions apply:
Carbonated drinks include any aerated beverage except for unflavoured aerated water. Also considered to be carbonated drinks are any concentrations, powder, gel, or extracts intended to be made into an aerated beverage.
Energy drinks include any beverages which are marketed, or sold as an energy drink, and containing stimulant substances that provide mental and physical stimulation, which includes without limitation: caffeine, taurine, ginseng and guarana. This also includes any substance that has an identical or similar effect as the aforementioned substances. Also considered to be energy drinks are any concentrations, powder, gel or extracts intended to be made into an energy enhancing drink.
Tobacco and tobacco products include all items listed within Schedule 24 of the GCC Common Customs Tariff.
From 1 December 2019, excise tax will be levied also on:
Electronic smoking devices and tools
Liquids used in such devices and tools
Sweetened drinks.
Rate of excise tax:
According to Cabinet Decision No. 52 of 2019 on Excise Goods, Excise Tax Rates of excise tax is as follows:
50 per cent on carbonated drinks
100 per cent on tobacco products
100 per cent on energy drinks
100 per cent on electronic smoking devices
100 per cent on liquids used in such devices and tools
50 per cent on any product with added sugar or other sweeteners.
Purpose behind levying excise tax
The UAE Government is levying excise tax to reduce consumption of unhealthy and harmful commodities while also raising revenues for the government that can be spent on beneficial public services.
How will it affect consumers?
Consumers will need to pay more for goods that are harmful to human health or the environment.