Excise tax in the UAE is a consumption tax on a short list of goods judged harmful to health or the environment. Tobacco and tobacco products, energy drinks, electronic smoking devices, and the liquids used in them are all taxed at 100%. Carbonated drinks are taxed at 50%. Sweetened drinks moved to a tiered per-litre model on 1 January 2026, so they are now charged by sugar content rather than at the old 50% flat rate. There is no registration threshold: any business that imports, produces, stockpiles, or releases excise goods from a designated zone must register with the Federal Tax Authority (FTA) before it starts, no matter how small the volume.
This guide sets out exactly which products are in scope, the current rates, how the tax base is calculated, why excise is charged before VAT, who has to register, and how registration and monthly returns work on EmaraTax. Every fee, rate, and rule below is cited to an official FTA or UAE government source. Because excise tax is a Your-Money-Your-Life topic where a misfiled return carries real penalties, confirm any figure against the FTA before you act on it.
What Is Excise Tax in the UAE?
Excise tax is an indirect tax introduced on 1 October 2017 under Federal Decree-Law No. 7 of 2017 on Excise Tax. It applies once, at the point excise goods enter the UAE market, and it is designed to reduce consumption of products that harm health or the environment while raising public revenue. Unlike the VAT registration threshold that lets small businesses stay out of VAT, excise tax has no threshold at all.
The tax is paid by the business that first brings the goods to market, the importer, producer, or stockpiler, and the cost is normally passed on to the consumer in the shelf price. It sits on top of the product price and is itself included in the base on which VAT is later calculated, which is why an excise good carries two layers of tax at the till.
Which Products Are Subject to Excise Tax, and at What Rate
The excise goods and their rates are set by Cabinet Decision No. 52 of 2019, as amended by Cabinet Decision No. 99 of 2025. Six categories are in scope. Four are taxed at 100% of the excise price, carbonated drinks at 50%, and sweetened drinks are now charged on a per-litre basis by sugar content.
| Excise good | Rate | Notes |
|---|---|---|
| Tobacco and tobacco products | 100% | Includes electrically heated cigarettes, confirmed as tobacco products under the 2025 amendment |
| Electronic smoking devices and tools | 100% | Vapes and similar devices, whether or not they contain nicotine |
| Liquids used in electronic smoking devices | 100% | E-liquids and refills |
| Energy drinks | 100% | Drinks marketed as energy drinks containing stimulants such as caffeine or taurine |
| Carbonated drinks | 50% | Aerated beverages, excluding unflavored sparkling water; a carbonated drink that contains sugar is also a sweetened drink (see below) |
| Sweetened drinks | Per litre by sugar content (from 1 Jan 2026) | Replaced the previous 50% flat rate; see the tiered model below |
The 100% rate means the tax equals the full excise price of the product, effectively doubling the pre-VAT cost of a pack of cigarettes or a can of energy drink. The 50% rate on carbonated drinks adds half the excise price on top. Tobacco also carries a separate minimum specific rate on cigarettes and waterpipe tobacco set by the FTA, so confirm the exact figure for your product category.
The 2026 Change: Tiered Tax on Sweetened Drinks
From 1 January 2026, sweetened drinks are no longer taxed at a 50% flat rate. The FTA moved to a tiered volumetric model that charges tax per litre based on total sugar and sweetener content per 100 ml. The change was introduced through an amendment to Cabinet Decision No. 52 of 2019 and confirmed in the FTA guidance on calculating excise tax for sweetened drinks.
Under the new model, the more sugar a drink contains per 100 ml, the higher the per-litre charge. Drinks below 5 g of sugar per 100 ml, drinks sweetened only with artificial sweeteners, and 100% natural juice with no added sugar are not charged. The FTA clarification on the tiered volumetric model sets out the bands.
| Sugar content per 100 ml | Excise per litre |
|---|---|
| 8 g or more (high sugar) | AED 1.09 |
| 5 g or more but less than 8 g (moderate sugar) | AED 0.79 |
| Less than 5 g (low sugar) | AED 0 |
| Artificial sweeteners only | AED 0 |
A carbonated drink that contains sugar is treated as a sweetened drink and taxed under this per-litre model, not the flat 50% carbonated rate. The exact classification of a specific product, particularly diet or zero-sugar carbonated drinks, depends on its full ingredient profile, so confirm the treatment of any individual SKU with the FTA before you price it.
How the Tax Base Works, and Why Excise Comes Before VAT
Excise tax is calculated on the “excise price,” which is the higher of two figures: the standard price the FTA publishes for the product where one exists, or the designated retail sales price excluding VAT. The designated retail price is the recommended selling price of the good in the market, again excluding VAT. This “higher of” rule stops businesses from understating the base to reduce tax.
Excise is charged first, and VAT is then applied to the price that already includes excise. That ordering matters: it means the 5% VAT is calculated on a larger base, so the two taxes compound at the till. The worked example below shows how the layers stack for a 100% good with a designated retail price of AED 10 (excluding VAT).
| Step | Amount (AED) |
|---|---|
| Designated retail price (excl. VAT) | 10.00 |
| Excise tax at 100% | 10.00 |
| Price including excise | 20.00 |
| VAT at 5% on excise-inclusive price | 1.00 |
| Final shelf price | 21.00 |
For a sweetened drink under the tiered model the excise portion is a fixed per-litre amount rather than a percentage. A one-litre high-sugar drink carries AED 1.09 in excise, which is added to the price before VAT is calculated. The mechanics of stacking excise then VAT are the same; only the way the excise figure is derived changes.
Who Must Register for Excise Tax (No Threshold)
Any person who imports excise goods into the UAE, produces them for release into the local market, stockpiles them in the course of business, or releases them from a designated zone must register for excise tax with the FTA. There is no minimum value or volume: a single excisable import triggers the obligation, and registration must be in place before the activity begins.
This is the sharpest difference from VAT and from the corporate tax obligations that apply to small businesses, both of which have thresholds or reliefs. Excise has neither. If you run an import-export business or are setting up a company in Dubai that will touch any excise good, registration is the first compliance step, not an afterthought.
Decision point: which role applies to you?
- Importer: you bring excise goods into the UAE from abroad. You register as an importer and account for the tax when the goods clear customs into the local market.
- Producer: you manufacture excise goods inside the UAE. Tax is due when the goods are released for consumption.
- Stockpiler: you hold a business stock of excise goods on which tax has not previously been paid, above your average monthly level. You register and account for tax on that stock.
- Warehouse keeper: you operate a designated zone or excise warehouse where goods are held under duty suspension. This is a separate registration on top of the excise registration itself.
Designated Zones and the Warehouse Keeper
A designated zone is an FTA-approved area where excise goods can be produced, stored, or held without excise tax becoming due, effectively a duty-suspension arrangement. Tax only crystallizes when the goods leave the zone and are released for consumption in the UAE. Each designated zone must have a registered warehouse keeper who is responsible for the goods held there and for the tax that becomes due on release.
For importers and producers who move large volumes, a designated zone can defer the tax point and improve cash flow, because excise is not paid while stock sits under suspension. Registering as a warehouse keeper and having a zone approved is a distinct process from the standard excise registration, and it carries its own reporting duties.
How to Register for Excise Tax on EmaraTax
Excise tax registration is completed online through the FTA’s EmaraTax portal. Registration itself is free. The process is a single application in which you identify your business, declare the roles you will hold (importer, producer, stockpiler, warehouse keeper), and list the excise goods you deal in. The steps below reflect the standard EmaraTax flow.
Step 1: Create an EmaraTax account
Go to the EmaraTax portal and create an account using your email and phone number, or log in with your UAE PASS digital identity. This account is the single login you will use for all federal taxes, so if you already registered for VAT or corporate tax you use the same credentials rather than opening a new profile.
Step 2: Add the taxable person and open the excise registration
Inside the dashboard, add or select the taxable person (the legal entity or individual that will hold the registration), then choose Excise Tax and select “Register.” If the business already exists on EmaraTax for another tax, you attach the excise registration to the same taxable person.
Step 3: Complete the excise registration form
Enter the entity details, trade license information, business activities, and the roles you will perform. You declare here whether you are registering as an importer, producer, stockpiler, or warehouse keeper, and whether you intend to operate a designated zone. Each role you tick expands the form with the details the FTA needs for that activity.
Step 4: Declare the excise goods you deal in
List the specific excise goods, providing product details and, where required, registering individual products in the FTA’s product registration system so each item is mapped to the correct category and rate. This is where sweetened and carbonated drinks are classified by their sugar content for the tiered model.
Step 5: Upload supporting documents and submit
Attach the required documents, typically the trade license, passport and Emirates ID of the authorized signatory, proof of authorization, and customs registration details for importers. Review the declaration and submit the application.
Step 6: Receive your excise Tax Registration Number (TRN)
The FTA reviews the application and, once approved, issues an excise Tax Registration Number. You use this TRN on all excise declarations and returns. Keep it and your EmaraTax login secure, because every subsequent filing runs through the same account.
What actually happens next: after approval, your EmaraTax dashboard shows an Excise Tax tile with your filing obligations. You submit declaration forms each time you import, produce, or release goods, and these feed into a monthly return. The portal displays the return status, the payable amount, and the payment deadline, and it sends reminders as the deadline approaches. Missing a deadline shows up as an overdue liability on the same dashboard.
Excise Tax Returns and Payment
Excise tax returns are filed monthly. The tax period is the calendar month, and the return and payment are both due by the 15th day of the month following the end of the tax period. Filing runs through EmaraTax, and importers and producers also submit declaration forms for individual transactions that roll up into the monthly return.
The monthly cycle is more frequent than VAT, where most businesses file quarterly, and much more frequent than corporate tax, where returns are annual. If you are already handling corporate tax registration on EmaraTax, the excise return sits in the same portal but on its own faster clock, so build the monthly deadline into your calendar from day one.
Penalties for Non-Compliance
Administrative penalties for excise tax are set under Cabinet Decision No. 49 of 2021 and are enforced by the FTA. Failure to register when required attracts a penalty of AED 10,000. A late return carries a penalty of AED 1,000 for the first offense and AED 2,000 if it happens again within 24 months. Late payment triggers a 2% penalty on the unpaid tax straight away, then a 4% monthly penalty on any amount still outstanding, up to a cap.
Because excise returns are monthly and the tax amounts per transaction are large, penalties can accumulate quickly. Businesses new to excise often underestimate the pace of the monthly cycle, the same discipline that applies to corporate tax filing deadlines and penalties applies here, only twelve times a year. Confirm the current penalty schedule with the FTA, as amounts are periodically revised.
FAQ
What is excise tax in the UAE?
Excise tax is an indirect tax on specific goods considered harmful to health or the environment, introduced on 1 October 2017 under Federal Decree-Law No. 7 of 2017. It is charged once when the goods enter the local market and is usually passed on to consumers in the retail price.
What products have excise tax in the UAE?
Six categories: tobacco and tobacco products, electronic smoking devices, liquids for electronic smoking devices, energy drinks, carbonated drinks, and sweetened drinks. Unflavored sparkling water and 100% natural juice with no added sugar are outside the scope.
What are the excise tax rates?
Tobacco products, electronic smoking devices, their liquids, and energy drinks are taxed at 100%. Carbonated drinks are taxed at 50%. Sweetened drinks are taxed per litre by sugar content from 1 January 2026: AED 1.09 per litre for high sugar, AED 0.79 for moderate, and AED 0 for low sugar or artificially sweetened drinks.
Is there a registration threshold for excise tax?
No. Unlike VAT, excise tax has no registration threshold. Any business that imports, produces, stockpiles, or releases excise goods from a designated zone must register with the FTA before the activity begins, regardless of value or volume.
Who must register for excise tax?
Importers of excise goods, producers who release them into the UAE market, stockpilers holding business stock on which tax has not been paid, and warehouse keepers operating designated zones. A single excisable import is enough to require registration.
How is excise tax calculated?
For percentage-rated goods, the tax is a percentage of the excise price, which is the higher of the FTA’s published standard price or the designated retail sales price excluding VAT. For sweetened drinks, it is a fixed amount per litre based on sugar content per 100 ml. Excise is added before VAT is calculated.
Is excise tax the same as VAT?
No. Excise applies only to specific goods, has no registration threshold, is filed monthly, and is charged once at market entry. VAT is a broad 5% tax with a registration threshold, is usually filed quarterly, and applies across most goods and services. On an excise good, excise is calculated first and VAT is then applied on top of the excise-inclusive price.
How often do I file excise tax returns?
Monthly. The tax period is the calendar month, and both the return and the payment are due by the 15th day of the following month, filed through EmaraTax.
What are the penalties for excise tax non-compliance?
Failure to register carries an AED 10,000 penalty. A late return is AED 1,000 for the first offense and AED 2,000 for a repeat within 24 months. Late payment adds 2% of the unpaid tax immediately, then 4% per month on the outstanding amount, up to a cap. Confirm current figures with the FTA.
Do individuals pay excise tax?
Consumers pay excise indirectly through higher retail prices, but they do not register or file. However, an individual who imports excise goods, for example carrying quantities above the personal allowance, can be treated as a taxable person and must account for the tax. Personal-use allowances at the border are limited, so check customs rules before importing.
Official Sources
- Federal Tax Authority: Excise Tax (Federal Decree-Law No. 7 of 2017)
- UAE Government Portal (u.ae): Excise Tax goods and rates (Cabinet Decision No. 52 of 2019)
- FTA: Calculating Excise Tax under the Tiered Volumetric Model for Sweetened Drinks
- FTA: Clarification of the Tiered Volumetric Model for Sweetened Drinks
- FTA: EmaraTax portal for registration and returns
- FTA: Taxable Person Guide for Excise Tax
Information current as of July 2026 and based on Federal Decree-Law No. 7 of 2017, Cabinet Decision No. 52 of 2019 (as amended by Cabinet Decision No. 99 of 2025), and Cabinet Decision No. 49 of 2021. Excise rates, tiers, and penalties are subject to change. This article is general information, not tax advice. Verify all figures with the Federal Tax Authority or a licensed tax adviser before acting.
