UAE Excise Tax continues to target specific goods considered harmful to public health. The regime applies to tobacco products, electronic smoking devices and their liquids, energy drinks, and sweetened beverages. There is no turnover threshold: the obligation arises with the first production, import, stockpiling or release of excise goods from a designated zone.
Current rates and the 2026 changes
Under Cabinet Decision No. 197 of 2025, which took effect on 1 January 2026, the main rates are:
- Tobacco and tobacco products — 100% of the excise price
- Electronic smoking devices and tools — 100%
- Liquids used in electronic smoking devices — 100%
- Energy drinks — 100%
Sweetened drinks moved from a flat percentage to a tiered volumetric model based on sugar content per 100 ml:
- 8 grams or more — AED 1.09 per litre
- 5 grams to under 8 grams — AED 0.79 per litre
- Less than 5 grams, or drinks sweetened only with artificial sweeteners — AED 0
Producers and importers of sweetened drinks must obtain an Emirates Conformity Certificate confirming sugar and sweetener content. Without an accepted certificate the product is taxed at the highest band.
From 1 September 2026, Cabinet Decision No. 137 of 2026 introduced minimum excise prices for tobacco products and e-liquids. The calculated excise price cannot fall below AED 0.4 per cigarette, AED 0.1 per gram of water-pipe or similar tobacco, or AED 1 per millilitre of liquid used in electronic smoking devices.
Who must comply
Registration with the Federal Tax Authority is required for anyone who produces, imports, stockpiles or releases excise goods from a designated zone. Retailers that purchase goods already taxed in the UAE generally do not need to register, but they remain exposed if they handle untaxed or unmarked stock.
Returns are filed periodically (commonly monthly) through EmaraTax, with payment due by the prescribed deadline. Certain tobacco products require tax stamps, and detailed records of production, imports, stock movements and valuations must be retained.
Industry-specific focus
Tobacco and vaping businesses face the highest rates and the new minimum-price floors, which affect pricing and margin calculations. Beverage companies dealing in energy drinks or sweetened products must manage product classification carefully, obtain the required laboratory certificates, and adjust pricing for the volumetric charges. Free-zone operators and logistics providers handling these goods need clear procedures for designated-zone movements to avoid additional penalties.
Practical compliance points
Accurate product classification, timely registration, correct valuation and complete documentation remain the foundation of compliance. Errors in sugar-content banding, failure to apply minimum prices, or movement of unmarked goods can trigger assessments, late-payment charges and administrative penalties. Regular reviews of product lists and stock records help businesses in the affected industries stay aligned with the updated rules.
