What is an excise tax?
Excise tax is an indirect tax levied on the sale of certain goods. These goods are taxable if imported into the UAE, manufactured in the UAE or stockpiled in the UAE.
Excise duty is levied on products that are harmful to humans and the environment. The main purpose of the sales tax is to reduce consumption of these specific goods and limit unhealthy practices.
In certain scenarios, goods are physically labeled to indicate that excise duty has already been paid to the government.
Which products are subject to excise tax?
- Carbonated Beverages: All carbonated beverages except unflavored carbonated water. Products used in the production of aerated beverages, such as concentrates, powders, gels and extracts, are also considered excise duty.
- tobacco and tobacco products
- Energy Drinks: Certain beverages contain energizers such as caffeine, taurine, ginseng and guarana that provide mental and physical stimulation. Concentrates, powders, gels, or extracts that are made into energy drinks are also subject to excise duty.
Scope of excise tax
You must register and pay sales tax if you engage in the following activities:
- Excise imports.
- Excise production or manufacture.
- Movement of excise products outside designated areas
- Excise reserves in the ordinary course of business.
- Excise sales in the United Arab Emirates. Sales tax is the responsibility of the seller and is included in the total sales price of the sales tax item.