New UAE excise tax comes into effect; prices of 1,610 items affected

New UAE excise tax comes into effect; prices of 1,610 items affected
(Picture for illustrative purposes only)
Published: 2 October 2017 - 4 a.m.

The new UAE excise tax law comes into effect on Sunday, with the price of soft drinks, cigarettes and energy drinks seeing a 50% hike across the emirates.

Soft drink prices will increase from AED1.50 to AED2.25, while the price of a pack of 20 cigarettes will double from AED8 to AED16. Sister publication Arabian Business reports that over the weekend shops across the emirates were reportedly running low on the products, as residents sought to stock up ahead of the change.

This is the first in a series of taxation reforms the UAE will undertake with the implementation of VAT from January 1, 2018, while the other GCC states of Bahrain, Kuwait, Oman and Qatar are expected to follow suit during the year.

According to Arabian Busisness, a total of 1,610 commodities are subject to the UAE's new excise tax, the Federal Tax Authority has announced. 

Sixty percent (974) of the items are classified as soft drink products, which increased 50 percent in price from Sunday.

Tobacco and its derivatives, like shisha, make up 26 percent (417), while 14 percent (219) of the list are energy drinks. Both tobacco and energy drinks have increased 100 percent. 

Khaled Al Bustani, director-general of the Federal Tax Authority, said the UAE Excise Tax has been adopted to reduce the consumption of goods that damage people’s health.

The Federal Tax Authority has prepared a list of taxable commodities to assist in the collection process, news agency WAM reported.

The number of items on the list could increase in the future if new brands of tobacco products, soft drinks or energy drinks are introduced.

The Federal Tax Authority announced last week that excise tax collections will only be accepted in e-Dirhams, a decision that is said will boost the government's efforts to adopt an electronic system, as well as providing a high-level of security and efficiency in payments.

The UAE is the second Gulf country after Saudi Arabia to apply excise taxes.

According to preliminary estimates, the UAE tax authority expects government revenues to increase by $1.9 billion (AED7bn) after the collection of the excise tax.



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