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UAE Excise Tax Fundamentals/Understanding Excise Tax
8 min

Excise Goods and Categories

Learn which products are subject to excise tax and their applicable rates.

Excise Goods and Categories

UAE excise tax applies to five main categories of goods, as defined by Cabinet Decision No. 38 of 2017 and subsequent amendments.

The five excise categories

| Category | Tax Rate | Examples | |----------|----------|----------| | Carbonated drinks | 50% | Soda, sparkling water with added sugar/flavoring, non-alcoholic beer | | Energy drinks | 100% | Beverages marketed as energy-boosting, containing stimulants like caffeine or taurine | | Tobacco products | 100% | Cigarettes, cigars, shisha, chewing tobacco, heated tobacco | | Electronic smoking devices | 100% | E-cigarettes, vape pens, e-liquids, e-pipes | | Sweetened drinks | 50% | Beverages with added sugar or sweetener, including juice, concentrates, ready-to-drink flavored milk |

Understanding each category

Carbonated drinks (50%) include any aerated beverage except unflavoured sparkling water. This covers sodas, flavoured sparkling water, and non-alcoholic malt beverages. Plain sparkling water is not excisable.

Energy drinks (100%) are beverages marketed as providing mental or physical stimulation, typically containing caffeine, taurine, ginseng, or similar stimulants.

Tobacco products (100%) cover all forms of tobacco intended for human consumption, including cigarettes, cigars, pipe tobacco, shisha/molasses, chewing tobacco, and snuff.

Electronic smoking devices (100%) include electronic cigarettes, vape pens, e-pipes, and the liquids and cartridges used with them. This category was added to cover emerging alternatives to traditional tobacco.

Sweetened drinks (50%) were added in December 2019. This category covers beverages with added sugar or other sweeteners, including fruit juices, flavored milk, and beverage concentrates. Plain milk, unsweetened drinks, and drinks sweetened only with natural fruit sugars are generally not excisable.

How to determine if your product is excisable

  1. Check the product composition — does it contain added sugar, sweeteners, carbonation, stimulants, or tobacco?
  2. Review how it is marketed — is it marketed as an energy drink?
  3. Consult the FTA's excise goods list and public clarifications.
  4. When in doubt, seek professional advice or request a clarification from the FTA.

Draft note: Product classification can be complex. Always verify against the latest FTA guidance and seek professional advice for borderline products.

Practical UAE example

**Scenario: Classifying a new product line** A UAE company plans to launch three beverages: 1. **Plain sparkling water** — Not excisable. Plain unflavoured sparkling water is excluded from the carbonated drinks category. 2. **Flavoured sparkling water with added sugar** — Excisable at 50%. It falls under both "carbonated drinks" (because it is aerated and flavoured) and "sweetened drinks" (because it has added sugar). The 50% rate applies. 3. **Sugar-free energy drink** — Excisable at 100%. Even without sugar, it is marketed as an energy drink and contains stimulants like caffeine and taurine. The 100% rate for energy drinks applies regardless of sugar content. The company must register for excise tax before importing or producing items 2 and 3. Item 1 requires no excise registration.

Key takeaways

  • Five categories of goods are subject to excise tax: carbonated drinks (50%), energy drinks (100%), tobacco (100%), e-smoking devices (100%), and sweetened drinks (50%).
  • Plain sparkling water and unsweetened natural drinks are generally not excisable.
  • A product can fall under multiple categories (e.g., a carbonated sweetened drink), but the applicable rate is determined by its primary classification.
  • Product classification depends on composition, carbonation, and marketing — not just the product name.
  • When in doubt about classification, consult FTA guidance or seek professional advice.

Authoritative sources

Cabinet Decision No. 38 of 2017 on Excise Goods, Substances and Tax Rates

UAE Cabinet · Cabinet Decision No. 38 of 2017

View source

FTA Excise Tax Guides and Public Clarifications

Federal Tax Authority (FTA) · FTA Excise Tax Guides (EXTP1, EXTP2, EXTP3 series)

View source
Knowledge check

1. A company imports a carbonated fruit juice with added sugar. What is the excise tax rate?

2. Which of the following products is NOT subject to excise tax?

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This lesson is general educational content, not individualized tax or legal advice. Always consult a qualified professional for your specific situation.