UAE excise tax applies to a short list of goods that the law treats as harmful to health or the environment. This is a general overview for importers and manufacturers; rates and rules change, so confirm the current position with the Federal Tax Authority (FTA) before you rely on it.
Which Goods Are Subject to Excise Tax?
According to the UAE Government portal, excise goods are tobacco and tobacco products, electronic smoking devices and their liquids, energy drinks, carbonated drinks (excluding sparkling water) and sweetened drinks. Tobacco products, energy drinks and electronic smoking devices and liquids are taxed at 100%, and carbonated and sweetened drinks were taxed at 50%.
From 1 January 2026, Cabinet Decision No. 197 of 2025 replaces the flat 50% charge on sweetened drinks with a tiered volumetric model based on sugar content per 100 ml: AED 0.79 per litre for 5 g or more but less than 8 g, and AED 1.09 per litre for 8 g or more. Drinks with less than 5 g of sugar per 100 ml, and drinks sweetened only with artificial sweeteners, are outside the charge. Carbonated drinks are no longer a separate category and are taxed according to their sugar content. Taxable persons need laboratory reports on sugar content; if none are provided, the FTA applies the highest tier, which can be adjusted later on approved documentation.
Key Takeaways:
- Register before you import, produce or stockpile excise goods; there is no registration threshold.
- Check which category each product falls into, particularly sweetened and carbonated drinks, where the basis of tax changed from 1 January 2026.
- Excise returns are filed by the 15th day following the end of each tax period.
Who Must Register?
Businesses that import excise goods, produce them for consumption in the UAE, stockpile them, or operate excise warehouses must register with the FTA. The UAE Government portal states that there is no registration threshold and that registration must be completed before the business starts the relevant activity. Registration, return filing, payment and refund requests are handled through the FTA's EmaraTax platform.
How Is Excise Calculated?
The tax base depends on the product. For drinks under the tiered model it is the volume and sugar tier, not the price. For goods still taxed as a percentage, the tax is charged on the "excise price" as defined in the law and FTA guidance, and the rules differ by product and by whether the goods are imported or produced locally. Use the FTA's current excise guides for your product rather than relying on a simple "cost price or selling price" shortcut.
Designated Zones
Excise treatment for Designated Zones is specific. Only free zones that the Cabinet has listed as Designated Zones for excise purposes, and that meet the applicable conditions, receive that treatment; holding a free zone licence does not by itself qualify a business. Confirm with the FTA whether your zone is listed and what conditions apply to moving excise goods in and out.
Imports and Customs Declarations
Imported goods are declared to the customs authority at the point of entry, and the excise position on import is linked to that process and to your FTA registration. EmaraTax is used for excise registration, returns, payments and refund requests; it is not the customs declaration system. Confirm the current customs and excise procedure for your emirate and product before you ship.
Exports and Refunds
Excise is generally payable when goods are released for consumption in the UAE. Where excise goods are exported or otherwise qualify for a deduction or refund, this is subject to specific conditions and supporting documents under the excise legislation and FTA guidance, and claims are made through EmaraTax. Keep import, warehousing and export records so that a claim can be supported.
Penalties and Non-compliance
Late registration, late returns and other excise defaults attract administrative penalties under the UAE Cabinet decisions on administrative penalties for tax violations, which have been amended over time. Check the current FTA penalty schedule and do not rely on a fixed figure. Keep complete records of imports, production, stock and returns to reduce the risk of errors.
Conclusion
The UAE excise regime is narrow but technical. Working out which goods are in scope, who must register, how the tax base is set for your product, and how Designated Zone, import and export rules apply will help you comply.
Need help? PNPC Global's India/UAE team is available at connect@pnpcglobal.com.