For specific goods, not general trade
Excise Tax Services in the UAE
Excise tax applies to a narrow, specific list of goods — tobacco products, electronic smoking devices, energy drinks and sweetened beverages — at rates considerably higher than standard 5% VAT. The rules changed materially on 1 January 2026: carbonated drinks are no longer their own flat-rate category, replaced by a sugar-content tiered system for all sweetened drinks.
100% on tobacco, vapes and energy drinks; sweetened drinks now taxed per litre by sugar content since 1 Jan 2026
Key facts
| Tobacco, e-smoking devices & liquids, energy drinks | 100% of the excise price |
| Sweetened drinks — under 5g sugar/100ml | 0% (exempt), including plain carbonated water |
| Sweetened drinks — 5g to under 8g sugar/100ml | AED 0.79 per litre |
| Sweetened drinks — 8g or more sugar/100ml | AED 1.09 per litre |
| Legal basis | Cabinet Decision No. 197 of 2025, effective 1 January 2026 |
| Registration trigger | Import, production, or stockpiling of excisable goods, before the first excisable transaction |
What this actually involves
Excise tax exists specifically to discourage consumption of goods considered harmful — tobacco, e-smoking devices and liquids, and energy drinks all carry a flat 100% rate, dramatically higher than the 5% standard VAT rate most businesses are used to working with. Sweetened drinks work differently since 1 January 2026: rather than a flat percentage, the tax is now calculated per litre based on actual sugar content, from fully exempt below 5g per 100ml up to AED 1.09 per litre at 8g or more — a tiered structure that replaced the old flat 50% carbonated-drinks rate entirely.
Registration is required before the first import, production, or stockpiling of excisable goods — not after the first sale. Businesses entering the beverage or tobacco-adjacent import trade sometimes discover the excise obligation only once goods are already in transit, which is considerably more disruptive than confirming classification and registration status before placing the order.
Product classification is the single most consequential decision in this area — not every beverage with sugar or caffeine automatically falls under excise tax, and the specific formulation and category definitions matter. Getting classification wrong in either direction — registering unnecessarily or failing to register when required — creates real problems, from unnecessary compliance overhead to significant back-tax and penalty exposure.
Is this actually relevant to you?
- You import, produce, or plan to stockpile tobacco products, e-smoking devices, energy drinks, or sweetened beverages in the UAE
- You're launching a new beverage product and aren't certain whether its specific formulation falls under excise tax categories
- You've been trading in an adjacent category and want confirmation your current products are correctly classified
- You're already registered but want your filing and classification reviewed for accuracy
Our process, step by step
Product classification review
Assessing your specific product against the defined excisable goods categories before you commit to an import or launch.
Excise registration
Registration completed before your first import, production, or stockpiling of excisable goods.
Return filing
Regular excise tax return filing and payment, reconciled to actual import and production records.
Scope of work
Excise registration sits alongside VAT registration and corporate tax registration, and excise goods held in stock make a periodic stock audit worthwhile.
The classification errors that create the most exposure
- Assuming a new beverage formulation is automatically exempt because it's marketed as 'healthy' or 'natural' — the actual sugar or caffeine content against defined thresholds is what determines classification, not marketing positioning.
- Registering for excise tax on a product that doesn't actually meet the excisable definition, creating unnecessary ongoing compliance overhead.
- Failing to register before goods are already in transit or production has started, creating a scramble to correct the position after the fact.
Related corporate tax services in the UAE
Every corporate tax service is delivered by the same team that keeps your books, so registrations, returns and elections stay consistent year to year.
Related guides from our team
Practical explanations of the rules behind this service, written by our chartered accountants.
Common questions
Do all beverage companies need excise registration?+
Only if the specific product falls under the defined excisable categories — plain water and most juices, for example, generally don't qualify, but specific formulations need individual assessment.
Is excise tax charged in addition to VAT?+
Yes — excise tax and VAT are separate taxes, both potentially applicable to the same excisable good, calculated independently.
How are sweetened and carbonated drinks taxed now?+
Since 1 January 2026, carbonated drinks are no longer a separate flat-rate category. All sweetened drinks are taxed per litre based on sugar content: exempt below 5g of sugar per 100ml (including plain carbonated water), AED 0.79/litre for 5g to under 8g, and AED 1.09/litre for 8g or more. This replaced the previous flat 50% rate and rewards genuinely lower-sugar formulations.
Do I need to register before I've made my first sale?+
Yes — registration is required before the first import, production, or stockpiling of excisable goods, not after the first sale is made.
Can excise tax registration be backdated if we discover we should have registered earlier?+
This needs individual assessment; the earlier a gap is identified and addressed proactively, the better the position compared to it being discovered through an FTA review.
Importing or producing goods that might be excisable?
Send us your product details and specific formulation — we'll confirm classification before you're mid-shipment and find out the hard way.