UAE excise tax explained: rates, sugar tiers and registration
Excise tax applies to five kinds of goods: tobacco, electronic smoking devices, the liquids used in them, energy drinks and sweetened drinks. A fizzy drink is taxed only if sugar or sweeteners have been added. There is no registration threshold, so anyone importing or producing these goods registers before the first taxable unit.
UAE excise tax is a single-stage tax on five categories of goods set by Cabinet Decision No. 197 of 2025, in force since 1 January 2026. 100% of the excise price applies to tobacco and tobacco products, electronic smoking devices, the liquids used in them and energy drinks. Sweetened drinks are taxed per litre by their sugar and sweetener content: AED 1.09 at 8 g or more per 100 ml, AED 0.79 at 5 g to under 8 g, and AED 0 below 5 g or with artificial sweeteners only; drinks in the AED 0 tier are still registered and reported. Carbonated drinks are no longer a separate category. There is no registration threshold: importers, producers and stockpilers register with the FTA before the first taxable unit, and returns are monthly.
- Five categories since 1 January 2026: tobacco, electronic smoking devices, their liquids and energy drinks at 100% of the excise price, and sweetened drinks per litre. The old 50% rate on carbonated drinks ended on 31 December 2025.
- Sweetened drinks: AED 1.09/litre at 8 g or more of sugar and other sweeteners per 100 ml, AED 0.79/litre at 5 g to under 8 g, AED 0 below 5 g. Drinks in the AED 0 tier must still be registered and reported.
- No threshold: registration is triggered by the activity, from the first unit.
- Percentage rates are charged on the excise price, which follows the retail price and is often far above your import cost.
- Returns are monthly; a designated zone warehouse can suspend the tax until goods are released for consumption.
Excise tax rates in the UAE
UAE excise tax is charged under Federal Decree-Law No. 7 of 2017, in force since 1 October 2017 and last amended in 2025. The goods and rates are set by Cabinet Decision No. 197 of 2025, which applies from 1 January 2026 and lists five categories. Goods outside the list are not subject to excise.
| Product | Excise |
|---|---|
| Tobacco and tobacco products | 100% of the excise price |
| Electronic smoking devices and tools | 100% of the excise price |
| Liquids used in electronic smoking devices | 100% of the excise price |
| Energy drinks | 100% of the excise price |
| Sweetened drinks, 8 g or more sugar and other sweeteners per 100 ml | AED 1.09 per litre |
| Sweetened drinks, 5 g to under 8 g per 100 ml | AED 0.79 per litre |
| Sweetened drinks under 5 g, or artificial sweeteners only | AED 0 per litre (still registered and reported) |
Whether a drink counts as an energy drink or a sweetened drink decides which line applies, so check each product’s classification with the FTA. Some drinks are not treated as sweetened drinks at all: drinks that are at least 75% milk or milk substitute, baby formula and baby food, drinks for special dietary or medical use, 100% fruit or vegetable juice with nothing added, and drinks made in a restaurant and served in an open container (Cabinet Decision No. 197 of 2025, Art. 7, and FTA guidance).
How excise is calculated on the excise price
For the 100% goods, the tax base is the excise price: the higher of the price the FTA publishes for the product and its designated retail price, which is itself the higher of the recommended retail price and the average market retail price, both excluding VAT. The excise is then taken out of that price, so in practice the excise equals about half of the shelf price before VAT. What you paid wholesale does not change the base.
That is why goods bought cheaply abroad can carry an excise bill several times their purchase cost. Model the excise on the retail figure before committing to a shipment, and include the 5% VAT that is then charged on the excise-inclusive value.
Who must register for excise tax
Excise has no registration threshold and no small-business exemption. If you bring excise goods into the country or release them into the local market, you register with the FTA before the first taxable event. Four roles trigger the duty.
| Role | What triggers registration |
|---|---|
| Importer | Bringing excise goods into the UAE for consumption; tax is due at the point they clear for the local market. |
| Producer / manufacturer | Producing excise goods domestically for release into the local market. |
| Stockpiler | Holding excise goods for business on which tax has not been paid, above normal business levels. |
| Warehouse keeper | Operating a designated-zone warehouse for excise goods and taking responsibility for the suspended stock. |
Registration is made on the FTA’s EmaraTax portal. If excise goods are only part of a wider trading licence, deal with it at set-up: your activity list and customs (HS) codes need to match what crosses the border, or the mismatch shows up at clearance. Our company formation team aligns the licence activities and codes before the first import.
Designated zones: suspending the tax
Excise designated zones are FTA-approved warehouses where excise goods can be held with the tax suspended. Excise becomes due only when goods leave the zone for consumption in the UAE, not while they are in stock and not if they are re-exported. For a business holding large stock, this helps cash flow, because it does not have to fund the excise on goods that may sit for months.
In return, a designated zone runs under a registered warehouse keeper, with a financial guarantee, detailed stock records and reconciliations for every unit. It suits volume and good record-keeping. For a small importer moving goods quickly it is usually not worth the overhead.
Sugar tiers for sweetened drinks since 2026
From 1 January 2026, Cabinet Decision No. 197 of 2025 replaced the flat 50% on carbonated and sweetened drinks with a tiered volumetric model. The tier depends on total sugar and other sweeteners per 100 ml of the ready-to-drink product, counting natural sugar too when sugar or sweeteners are added: AED 1.09 per litre at 8 g or more, AED 0.79 per litre at 5 g to under 8 g, and AED 0 below 5 g or with artificial sweeteners only. Drinks in the AED 0 tier are still excise goods, so importers and producers must register each product with the FTA and report it (FTA public clarification EXTP013).
Producers, importers and stockpilers need an Emirates Conformity Certificate for the sugar content of each drink, issued through the Ministry of Industry and Advanced Technology. Without an approved laboratory certificate, the FTA taxes the drink at the high-sugar rate of AED 1.09 per litre until the certificate is filed. Recipe and portion size now affect the excise directly, so map every product against the tiers.
Excise returns, records and penalties
Excise returns are filed monthly, and the records behind them must trace products unit by unit: imports, production, releases from a designated zone and stock on hand. That is a heavier cycle than the quarterly VAT return many businesses are used to.
Penalties apply for late registration, late or incorrect returns and late payment, and the charge on unpaid tax grows each month. As with VAT and corporate tax, an error disclosed voluntarily usually costs less than one the FTA finds first. Register before the first import, file every month and reconcile stock against declarations. Our accounting service includes excise in the same monthly close as VAT and payroll.
Excise in the wider UAE tax system
Excise sits alongside 5% VAT, 9% corporate tax and customs duty, each with its own base and timing. Importers who treat them as one figure often under-price shipments. See how they fit together in our overview of UAE taxes before you order stock.
If you deal in tobacco, vapes, energy drinks or sweetened drinks, excise applies whatever your size. Include it in the landed cost, register before the first unit and keep monthly records.
Frequently asked
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This is general information on UAE rules. It is not legal, tax or immigration advice for your situation. Rules and government fees change; we confirm the position for your facts in writing before you act.