Tax & compliance
Excise tax — who it actually applies to
Tobacco, energy drinks, carbonated drinks, sweetened drinks and vaping products, at rates up to 100%. If you import or stock any of them, the obligation is yours and it is separate from VAT.
The rule
What the law actually requires.
Excise tax applies to a defined list of goods: tobacco and tobacco products at 100%, energy drinks at 100%, electronic smoking devices and liquids at 100%, carbonated drinks at 50%, and sweetened drinks at 50%. It is charged on importers, producers and stockpilers of those goods, and on operators of designated excise warehouses. It is a separate registration, a separate return and a separate regime from VAT, and being registered for VAT does nothing for excise purposes.
The category that catches businesses out is stockpiling. A retailer, a restaurant, a hotel or a distributor holding excise goods above defined levels on which excise has not previously been paid can be a stockpiler with its own registration and payment obligation, without ever having imported anything. Sweetened drinks in particular have a wider reach than people expect, capturing a large range of products that would not obviously be described as soft drinks. Anyone in food and beverage retail or distribution should test the position rather than assume excise is somebody else's problem.
Thresholds and deadlines
- Tobacco and tobacco products
- 100%
- Energy drinks
- 100%
- Electronic smoking devices and liquids
- 100%
- Carbonated drinks
- 50%
- Sweetened drinks
- 50%
- Who registers
- Importers, producers, stockpilers, warehouse keepers
The compliance calendar
What to do
The filing, step by step.
- Test whether your goods are within the listSweetened drinks in particular is broader than it sounds and captures many products.
- Establish which category you fall intoImporter, producer, stockpiler or warehouse keeper. Stockpiling is the one businesses miss.
- Register separately from VATExcise registration is its own process; a VAT registration does not cover it.
- Price the tax into the productAt 50% or 100% it is not a margin adjustment, it is the whole commercial model.
- File excise returns on their own cycleSeparate from VAT returns, with their own deadlines and penalties.
Related
Questions
Tobacco and tobacco products, energy drinks and electronic smoking devices and liquids at 100%; carbonated drinks and sweetened drinks at 50%.
Possibly. Holding excise goods above defined levels on which excise has not been paid makes you a stockpiler with a registration obligation.
No. It is a separate regime with separate registration, returns and deadlines, charged at much higher rates on a narrow list of goods.
VAT is calculated on the excise-inclusive price, so the two compound.
One question
Where are you with VAT?
The test is rolling rather than annual, which is why the obligation usually arises mid-year rather than at a year end. Above AED 375,000 of taxable supplies over any twelve months it is mandatory, and the thirty-day forward test can trigger it before you have invoiced anything.
The thresholds explainedOr just ask usThen the exposure is almost certainly input VAT rather than output. Claims without a valid tax invoice, entertainment, and personal-use vehicles are the three findings that come up on nearly every review, and the adjustment carries a penalty.
What gets disallowedOr just ask usDisclose it rather than hoping. The penalty on a voluntary disclosure is materially lower than on an error the FTA finds, and audits that uncover undisclosed errors tend to widen rather than close.
Voluntary disclosureOr just ask us