Excise tax in the UAE is imposed at 100% on tobacco and tobacco products, e-cigarette devices and liquids, and energy drinks, and at up to AED 1.09 per litre on sweetened drinks under a graduated volumetric model based on sugar content, with no excise rate exceeding 200% of the excise price under the Decree-Law.
Scope of the Excise Tax
The Federal Decree-Law on Excise Tax provides that the tax is imposed on the following activities relating to excise goods: producing excise goods in the State in the course of conducting business, importing excise goods, releasing them from a designated zone, and stockpiling them in the State in the course of conducting business.
The Upper Ceiling on the Tax Rate
The Decree-Law delegates the determination of the tax rates imposed on excise goods and the method of calculating the excise price to a Cabinet Decision issued on the Minister's proposal, provided that the tax rate imposed on any excise good does not exceed 200% of its excise price.
The Rates Set for Excise Goods
The Cabinet Decision on excise goods set the following tax rates and amounts:
- Tobacco and tobacco products: 100%.
- Liquids used in electronic smoking devices and tools, and electronic smoking devices and tools themselves: 100% each.
- Energy drinks: 100%.
- Sweetened drinks containing 8 grams or more of sugar or other sweeteners per 100 millilitres: AED 1.09 per litre.
The Graduated Volumetric Model for Sweetened Drinks
The Cabinet Decision adopted a graduated volumetric model for calculating the tax on sweetened drinks based on the total sugar and other sweetener content per 100 millilitres instead of a fixed rate, with the Decision taking effect from 1 January 2026.
Calculating the Excise Price
Excise tax is imposed on the basis of the excise price of the good, which is determined by the Cabinet under the Decision it issues on the Minister's proposal, when setting the tax rates or amounts imposed on each category of excise goods covered by that Decision.
Illustrative Example
Illustrative example: if a trader imports energy drinks, the excise tax due on them is calculated at 100% of the excise price of those drinks, whereas if the good is a sweetened drink containing 8 grams of sugar or more per 100 millilitres, the tax is calculated at AED 1.09 for each litre of that drink.
Legal References
- Federal Decree-Law No. (7) of 2017 on Excise Tax — Article (2) and Article (3)
- Cabinet Decision No. (197) of 2025 on Excise Goods, the Excise Tax Rates or Amounts Thereon, and the Method of Calculating the Excise Price — Article (10) and Article (15)
For questions about your specific situation, you can ask the UAE Tax & Legislation Helper on Helpers, or consult a licensed chartered accountant.
