Many assume that the UAE is a completely tax-free jurisdiction. While the country has traditionally maintained a low-tax environment — and personal income tax remains nil — certain taxes are now firmly in place, including Corporate Tax, VAT, and Excise Tax.
Excise Tax is a key indirect tax levied on specific goods that are considered harmful to human health or the environment. Compared to long-established global tax regimes, Excise Tax in the UAE is relatively recent, and many businesses are still unclear about its applicability, rates, registration requirements, and compliance procedures.
A clear understanding of Excise Tax is essential for businesses that manufacture, import, stockpile, or release goods such as tobacco products, energy drinks, sweetened beverages, and electronic smoking devices and liquids. Proper compliance helps businesses avoid penalties, manage pricing effectively, and maintain smooth regulatory operations.
What is Excise Tax in Dubai, UAE?
Excise Tax is an indirect tax levied by the UAE government on the manufacture, import, production, or stockpiling of specific goods. The primary objective of this tax is to discourage the consumption of products that are harmful to human health or the environment.
Under UAE legislation, Excise Tax applies only to designated “excise goods” that are officially notified by the Federal Tax Authority (FTA). These include products such as tobacco, energy drinks, sweetened beverages, electronic smoking devices and liquids, and other specified items.
Any business involved in the import, production, stockpiling, or release for consumption of excise goods within the UAE is required to:
- Register for Excise Tax with the FTA
- Maintain proper records and documentation
- File periodic Excise Tax returns
- Pay the applicable tax within the prescribed deadlines
Compliance with FTA regulations is mandatory. Failure to register, file returns, or pay Excise Tax on time may lead to administrative penalties, fines, and other regulatory consequences.
Applicable Goods – Which Goods Are Subject to Excise Tax in the UAE?
In the UAE, Excise Tax is levied on specific goods that are considered harmful to human health or the environment. The following categories of products are currently subject to Excise Tax:
- Tobacco and tobacco products – including cigarettes, cigars, shisha, and other smoking products
- Electronic smoking devices and tools – such as e-cigarettes, vape devices, and related equipment
- Liquids used in electronic smoking devices – whether containing nicotine or not
- Energy drinks – beverages marketed or sold as energy-enhancing products that contain stimulants such as caffeine, taurine, ginseng, or guarana
- Sweetened beverages – any drinks with added sugar or other sweeteners, including carbonated drinks, flavored drinks, and concentrates, powders, gels, or extracts that can be converted into a sweetened beverage
- Businesses dealing with the manufacture, import, distribution, or storage of these products must assess their Excise Tax obligations and ensure full compliance with Federal Tax Authority (FTA) requirements.
Rates of Excise Tax in the UAE
In the UAE, Excise Tax is applied at specific rates depending on the category of goods. The tax is generally levied as a percentage of the product’s excise price (typically 50% or 100%). However, for certain sweetened beverages, a tiered sugar-based model applies, where tax is calculated based on a fixed volumetric rate per litre, depending on the sugar content.
The applicable framework is as follows:
- 100% Excise Tax
- Tobacco and tobacco products
- Electronic smoking devices and tools
- Liquids used in electronic smoking devices
- Energy drinks
- 50% Excise Tax
- Carbonated drinks and other sweetened beverages (where the standard percentage model applies)
- Volumetric (Sugar-Based) Excise for Certain Sweetened Beverages
- Tax is charged per litre based on the sugar concentration, under the UAE’s tiered sugar model, aimed at encouraging lower sugar content and promoting healthier consumption patterns.
Businesses must determine the correct tax treatment based on the product classification, excise price, and, where applicable, the sugar content to ensure accurate calculation and compliance with Federal Tax Authority (FTA) regulations.
| Category | Type of Goods | Excise Tax |
| Tobacco and Tobacco Products: | Cigarettes, cigars, and rolling tobacco Pipe tobacco Heated tobacco products | 100% |
| Electronic Smoking Devices & Liquids: | Includes: E-cigarettes Vape pens Electronic pipes Refillable and disposable vaping devices | 100% |
| Energy Drinks: | Beverages containing stimulants such as: Caffeine Taurine Guarana Other similar substances | 100% |
| Carbonated Drinks: | Fizzy soft drinks Carbonated flavored beverages Any product with added sugar and sweetness Plain sparkling water without added sugar or sweeteners is excluded. | 50% |
Tax Calculation Method/How to calculate Excise Tax in UAE?
Tiered Volumetric Model for Sweetened Beverages (Effective 1 January 2026)
| Category | Sugar/Sweetener Content per 100 ml | Excise Tax Rate |
| High sugar | ≥ 8 g | AED 1.09 per litre |
| Moderate sugar | ≥ 5 g and < 8 g | AED 0.79 per litre |
| Low sugar | < 5 g | AED 0 |
| Artificially sweetened drinks only | No sugar | AED 0 |
Proper testing and documentation are critical; otherwise, products may default to the highest tax bracket.
Who must register for excise tax in the UAE?
Registration is mandatory for any person or business that:
- Produces excise goods in the UAE
- Imports excise goods into the UAE
- Stockpiles of goods
- Releases excise goods from a Designated Zone
- Is responsible for overseeing a Designated Zone
There is no minimum turnover threshold for Excise Tax registration. Registration must be completed within 30 days of becoming liable.
How to Register for Excise Tax in the UAE
Excise Tax registration is completed online through the FTA’s EmaraTax portal, which is accessible 24/7. Businesses dealing with excise goods must ensure timely registration to avoid penalties and ensure regulatory compliance.
Step 1: Create an EmaraTax Account
Sign up on the Federal Tax Authority (FTA) portal and activate your EmaraTax profile.
Step 2: Complete the Taxable Person Profile
Provide detailed information, including:
- Legal entity details
- Contact information
- Business activities
- Applicable tax obligations
Step 3: Apply for Excise Tax Registration
Log in to your account and select “Excise Tax Registration” under the registration services.
Step 4: Upload Supporting Documents
You will be required to submit the following:
- Trade License / Business License
- Emirates ID and/or passport of the authorized signatory
- Proof of authorization (e.g., Power of Attorney or authorization letter)
- Declaration of activities (import, production, stockpiling, or release of excise goods)
- Relevant supporting documents such as invoices, contracts, and bank details
Step 5: Submit the Application
After submission, the FTA will review the application. Upon approval, the business will be issued a Tax Registration Number (TRN) for Excise Tax.
Timely registration is mandatory for businesses dealing in excise goods, and operating without registration may result in administrative penalties.
Professional Tip:
If the application is completed accurately and all required documents are properly submitted, the Federal Tax Authority (FTA) typically processes Excise Tax registration within up to 20 business days. However, incomplete information, incorrect details, or improperly arranged documentation can lead to delays, additional clarification requests, or closer scrutiny by the FTA. In certain cases, non-compliance or delayed registration may also result in administrative penalties.
If you are uncertain about any part of the process, seeking professional assistance can help streamline the registration, ensure accuracy, and avoid unnecessary delays or compliance risks.
For further guidance, feel free to contact us or schedule a free consultation — our team will be happy to assist you.
How to Pay Excise Tax in the UAE
Excise Tax returns are generally filed monthly through the EmaraTax portal. Businesses dealing in excise goods are required to:
- Declare the quantities and movements of excise goods during the tax period
- Calculate the Excise Tax liability based on applicable rates
- Submit the return within the prescribed deadline
- Generate a payment reference number (PRN) and settle the tax due online
Payments can be made through approved channels available on the EmaraTax portal, including:
- Bank transfer
- e-Dirham
- Other FTA-approved payment methods
For many business owners, this process can be complex — particularly when generating the correct payment reference, selecting the appropriate tax period, or ensuring that the payment is accurately reflected in the system.
If you are unsure about any step, seeking professional assistance can help ensure timely and accurate payment, minimizing the risk of errors, delays, or penalties.
Record-Keeping & Documentation for Excise Tax
The Federal Tax Authority (FTA) requires all registered persons to maintain comprehensive records, including:
- Import and export documentation
- Production records and stock movement reports
- Warehouse records and designated zone documentation (where applicable)
- Sales invoices and delivery notes
- Sugar content analysis reports for sweetened beverages (where relevant)
These records must be retained for a minimum of five years and should be readily accessible in the event of an FTA audit or review.
Maintaining proper documentation is a mandatory compliance requirement, not merely a best practice. Many businesses choose to outsource their accounting and excise compliance to professionals to ensure accurate record maintenance, reduce compliance risks, and avoid penalties — often more cost-effectively than managing the function in-house.
Legal Framework Governing Excise Tax
Excise Tax in the UAE is regulated under a comprehensive legal framework that outlines the scope, applicability, compliance requirements, and penalties. The key legislations include:
- Federal Decree-Law No. (7) of 2017 on Excise Tax
- Federal Decree-Law No. (7) of 2025 – incorporating the latest amendments
- Cabinet Decision No. (197) of 2025 – introducing the tiered volumetric (sugar-based) model for certain sweetened beverages
- Cabinet Decision No. (38) of 2017 – Executive Regulations governing the implementation of Excise Tax
These provisions collectively define taxable goods, applicable rates, registration and filing obligations, record-keeping requirements, and administrative penalties for non-compliance.
Conclusion
Excise Tax in the UAE is a closely regulated indirect tax that significantly affects businesses involved in tobacco products, electronic smoking devices and liquids, energy drinks, and sweetened beverages.
With the introduction of the tiered volumetric model, compliance has become more technical — particularly for beverage manufacturers, importers, and distributors.
Accurate product classification, robust documentation, timely registration and filing, and disciplined record-keeping are critical to ensuring compliance and mitigating financial, operational, and legal risks.
How Can Mercurius Help?
At Mercurius, we provide end-to-end support to help businesses manage their Excise Tax obligations efficiently and compliantly. Our services include:
- Excise Tax registration with the Federal Tax Authority (FTA)
- Advisory on product classification and sugar content assessment under the tiered volumetric model
- Monthly Excise Tax return preparation and filing
- Designated zone advisory and compliance support
- Stock reconciliation and movement tracking
- Audit readiness and FTA assessment support
- Ongoing Excise and indirect tax advisory
With over 17 years of experience in regulatory and tax compliance across 60+ countries, our team ensures that your excise requirements are managed professionally, accurately, and within statutory timelines — allowing you to focus on your core business without compliance concerns. We provide complete assistance to businesses that want to set up or expand in Dubai- UAE and across the GCC by offering comprehensive end-to-end support.
If your business deals in excise goods, this is the right time to review your compliance framework and address any gaps before they lead to penalties or operational risks. For further details regarding this, you can Contact Us!
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FAQ’s
1.What is Excise Tax in the UAE?
Excise Tax is an indirect tax imposed by the UAE government on specific goods harmful to health or the environment, such as tobacco, energy drinks, sweetened beverages, and electronic smoking devices.
2.What is the Excise Tax rate in UAE in 2026?
In 2026, Excise Tax is:
-100% on tobacco, vaping products, and energy drinks
-50% on certain carbonated drinks
-AED 1.09 or AED 0.79 per litre under the tiered sugar model for sweetened beverages
3.Who must register for Excise Tax in UAE?
Any business that:
-Produces excise goods
-Imports excise goods
-Stockpiles excise goods
-Releases goods from a designated zone
There is no minimum turnover threshold.
4.How to calculate Excise Tax in UAE?
Excise Tax is calculated either:
-As a percentage of the excise price (50% or 100%), OR
-Based on volumetric sugar content (AED per litre) under the tiered model.
5.Is Excise Tax filing monthly in UAE?
Yes. Registered businesses must file Excise Tax returns monthly through the EmaraTax portal and pay the tax within the prescribed deadline.
6.What happens if you don’t register for Excise Tax?
Failure to register, file returns, or pay tax may result in administrative penalties, fines, and regulatory action by the Federal Tax Authority (FTA).