Federal Tax Authority Announcement Excise Tax on Sugary & Sweetened Beverages

The Federal Tax Authority of the UAE announced recently that it will start applying a 50% Excise Tax on Sugar & Sweetened Beverages and a 100% Excise Tax on electronic devices, liquids and equipment used for smoking. The Decision to expand the list of ExciseGoods is expected to be applicable on 1 January 2020.

The amend list includes the following Excisable product under Excise TAX:-

• Tobacco (100%)
• Energy drinks (100%)
• Carbonated drinks (50%)
• Sugary & Sweetened Beverages (50%) – New
• Electronic devices and equipment used for smoking, and their equivalents (100%) – New
• Liquids used in electronic devices and equipment used for smoking, and their equivalents (100%) – New

The Federal Tax Authority (FTA) clarified what should be sweetened drink,  exempt beverages, and e-liquids:-

What is a sweetened drink – The authority identifies sweetened drinks as any product to which a source of sugar or sweetener is added and is produced as either a ready-to-drink beverage or as concentrates, gels, powders, extracts, or any other form that can be converted into a sweetened drink.

What is exempt beverages - The authority also outlines beverages that are not included in the new tax, namely, ready-to-drink beverages containing at least 75 percent milk; ready-to-drink beverages containing at least 75 percent milk substitutes; baby formula or baby food; beverages consumed for special dietary.

What is E-liquids (Electronic smoking device) - The authority also clarified that e-liquids will include all liquids used in electronic smoking devices and tools and the like, whether or not containing nicotine or tobacco. E-cigarettes refer to all electronic smoking devices and tools and the like, whether or not they contain nicotine or tobacco.

The introduction of Excise Tax on Sugar & Sweetened Beverages and other Tobacco-related products brings a significant change to all businesses that import, produce or trade-in those products in UAE.

Last Updated: 30^th August 2019 This article is contributed by:  CA Priyanka Garg Manager-Taxation