Dubai and the UAE have taken major strides towards modernizing their tax framework, with the UAE Excise Tax emerging as a crucial regulatory lever since its introduction in 2017. Used to curb consumption of products deemed harmful—including tobacco, energy drinks, sweetened beverages, and electronic smoking devices—excise taxation is designed to shift consumer behaviour and boost public health while supporting national revenue. The latest updates, announced in 2025, mean major changes for sweetened drinks: a new tiered system taxes beverages according to their sugar content, requiring businesses to review recipes and registration processes to stay compliant. Whether you’re a manufacturer, importer, retailer, or simply looking to understand how excise affects your operations in Dubai and the UAE, this guide offers everything you need to know about Excise Tax UAE, the essential legal updates, compliance challenges, and why My Taxman is your top advisor for all excise and tax matters.
- UAE Excise Tax is an indirect tax imposed on goods that are harmful to health or the environment.
- Introduced in October 2017 and expanded over subsequent years, the UAE Excise Tax targets tobacco products, energy drinks, carbonated drinks, sweetened beverages, and electronic cigarettes or vaping liquids.
- The purpose is twofold: to discourage unhealthy consumption and generate revenue for public programs and infrastructure.
- Excise Tax applies to manufacturers, importers, stockpilers, and anyone releasing excise goods into the UAE market.
Excise Tax Rates in the UAE (2025)
Excise Good Category | Excise Tax Rate | Notes |
Tobacco & Tobacco Products | 100% | Highest rate to discourage smoking |
Energy Drinks | 100% | Includes all forms and concentrates |
Carbonated Drinks | 50% | All aerated beverages except water |
| Sweetened Drinks | 50% (Variable) | Newly tiered, sugar-content based rates launched for 2026 |
Electronic Smoking Devices/Liquids | 100% | Covers e-cigarettes, vaping devices, and liquids |
Note: Certain natural-sugar drinks, milk drinks, baby food, and specific dietary products may be exempt; check with FTA guidelines for specifics.
Latest Update: Excise Tax on Sweetened Drinks (2025-2026)
What Changed?
- In September 2025, the UAE Federal Tax Authority (FTA) approved a new tiered volumetric Excise Tax model for sweetened drinks, replacing the flat 50% rate with a system based on sugar content per litre.
- Under this mechanism, the more Sugar in a drink, the higher the tax rate per litre.
- The change aims to directly incentivise manufacturers to lower sugar levels in their recipes—and encourage healthier consumption choices for residents.
Tiered Excise Rates Explained
Sugar Content per 100ml | Excise Category | Expected Excise Tax (per Liter) |
High Sugar (≥8g / 100ml) | High Tier | Highest bracket, likely >50% |
Moderate Sugar (≥5g and <8g/100ml) | Mid Tier | Middle bracket rate |
Low Sugar (<5g / 100ml) | Low Tier | Preferential, reduced rate; may be close to zero |
Only Artificial Sweeteners | Exempt | No excise if only non-nutritive sweeteners |
- Drinks containing only natural sugar and excluding substances (e.g., milk) may not be subject to excise tax; always check FTA clarification.
Why Move to Sugar-Based Tax?
- Public health: Reduce sugar consumption and associated lifestyle diseases.
- Encourage food industry reformulation: Manufacturers must update recipes to minimise tax impact and appeal to health-conscious consumers.
- Dynamic policy: Allows FTA to adjust incentives and penalties as public health data evolves.
Who is Impacted?
- Manufacturers, importers, and distributors of beverages with added sugars or sweeteners.
- Retailers and stockpilers are releasing excisable drinks for sale or consumption.
- Hospitality and food service businesses serving sweetened beverages.
Excise Tax Registration and Compliance in the UAE
Who Must Register?
- Anyone who produces, imports, or stocks excisable goods (tobacco, energy drinks, sweetened/carbonated beverages, vaping products).
- Registration must be completed via FTA’s “EmaraTax” portal before the start of any taxable activities.
- Late registration triggers an administrative penalty of AED 20,000.
Required Documents:
- Trade license
- Passport and Emirates ID of shareholders/owners
- List and details of excisable goods
- Customs Authority registration (if applicable)
- Warehouse details (if maintaining excise zones)
- TRN if registered in another GCC state
Registration Steps
- Sign in to the EmaraTax portal (FTA official website).
- Go to the EX101 form and complete all sections, including business details, excise goods, and contact info.
- Upload supporting documents and make declarations.
- Submit and await FTA approval, typically granted within 20 business days.
Excise Tax Return Filing
- Excise Tax returns are filed monthly—usually by the 15th of the month for the previous month.
- All tax due must be paid via the EmaraTax system before or by the return deadline.
- Excise tax is due as soon as goods are imported, released for consumption, or acquired by a stockpiler.
Compliance Requirements
- Maintain complete records of excise goods produced, imported, stocked, or released.
- Accurate statements of goods held in designated zones.
- Reconcile excise tax paid against physical stocks and sales.
- Regular reviews of product formulation and packaging (especially post-sweetened drinks update).
- Electronic recordkeeping is highly recommended as FTA moves toward digital transformation.
Designated Zones and Warehouses
- Designated zones (excise warehouses) can hold excisable goods removed from the scope of taxation until released for sale or use in the UAE.
- Transfers between designated zones are not subject to excise tax unless released.
- Warehouse keepers must be registered and approved by the FTA.
Penalties for Non-Compliance
- Late or non-registration: AED 20,000 fine per incident.
- Incorrect or late excise tax payment: Percentage-based penalties and daily interest; can escalate based on tax owed.
- Failure to maintain proper records: Additional fines, business license suspension, or even legal proceedings.
Misrepresentation or fraudulent filing: Hefty fines and possible criminal action under UAE law.
Why Excise Tax Matters for UAE Businesses
Business Implications
- Cost structure: Excise taxes increase product costs for manufacturers and importers, affecting pricing strategies and margins.
- Compliance workload: Monthly filing, detailed recordkeeping, and regular audits are now standard for affected industries.
- Product reformulation: Companies must now focus on reducing Sugar in recipes to lower excise burden—potentially investing in R&D and marketing.
- Consumer demand: An excise tax may shift market preferences, driving demand for healthier, lower-sugar alternatives.
Market Impact
- UAE’s high compliance rate: Over 1,777 excise tax registrants recorded as of September 2025, reflecting robust adaptation to new rules.
- Digital transformation: “Zero Digital Bureaucracy” initiative means excise processes—from registration to return—are increasingly paperless and rapid.
Top FAQs: UAE Excise Tax
- What is UAE Excise Tax?
UAE Excise Tax is an indirect tax imposed on certain products harmful to health or the environment, including tobacco, energy drinks, carbonated and sweetened drinks, and vaping devices.
- What is the excise tax rate for sweetened drinks in 2025?
A tiered system bases the rate on sugar content per 100ml; previously 50%, now variable, with more Sugar attracting higher tax rates.
- Who must register for excise tax in the UAE?
Any business producing, importing, or releasing excise goods, or stockpiling for sale, must register before commencing activity via the EmaraTax portal.
- What are the penalties for non-compliance?
Late registration incurs a fine of AED 20,000; unpaid or misreported excise tax triggers additional penalties and possible business sanctions.
- Are any products exempt from excise tax?
Drinks with only natural sugars and certain food items may be exempt, as are some milk-based or dietary products.
- How do designated zones work under UAE Excise Tax?
Designated zones allow for tax suspension while goods are warehoused; the tax applies when goods enter free circulation/consumption in the UAE.
- How is excise tax reported and paid?
Excise returns must be filed monthly through EmaraTax, with all payments settled electronically for each monthly period.
- Why is a sugar-based tax better for public health?
It incentivises manufacturers to reduce unhealthy sugar content, supporting broader public health goals in the UAE.
- Can small retailers be affected by excise tax?
Yes, any retailer or business that releases excisable goods for public consumption is subject to registration and compliance requirements.
- Does excise tax apply to exports?
Excise tax applies only to goods released for consumption in the UAE, not on products intended for exports.
Strategic Insights: Preparing for Excise Tax Success in 2025
Steps for Businesses
- Review all product lines for excise liability, especially reformulate sweetened drinks as soon as possible.
- Register on EmaraTax and ensure monthly filings are prompt and accurate.
- Maintain meticulous digital records and be prepared for FTA audits at short notice.
- Evaluate designated zones if large-scale warehousing is involved, and appoint competent warehouse keepers.
- Update packaging to show nutritional content and sugar levels clearly.
Industry Best Practices
- Engage with FTA awareness campaigns and attend training webinars on new excise procedures.
- Implement ERP or accounting software that automates excise calculations and provides compliance features.
- Collaborate with legal, tax, and nutritional consultants for compliance and product reformulation.
Why Choose My Taxman for Excise Tax & Compliance?
Choosing the right advisor for UAE Excise Tax is critical—especially with new regulations and increased audit activity in 2025.
What Sets My Taxman Apart
- Licensed Expertise: My Taxman is led by Ministry-approved experts with deep practical experience in excise, VAT, corporate tax, and cross-border tax challenges.
- Best Tax consultants in Dubai: Proven track record with manufacturers, importers, hospitality, FMCG, and beverage businesses navigating complex excise regimes.
- End-to-End Support: From initial registration to monthly filing, product review, audit preparation, and appeals—we handle every aspect of excise tax compliance for you.
- Entry in TOP 20 AUDIT FIRMS IN DUBAI 2025: Our audits and advisory services are trusted by the UAE’s leading names, ensuring reliability and authority for your brand.
- Digital Advantage: We leverage the latest ERP and compliance technologies to ensure your filings are accurate, timely, and audit-proof.
- Holistic Approach: As a full-service firm, we advise on corporate tax, VAT, transfer pricing, due diligence, fundraising, and more—making My Taxman your one-stop partner.
- Transparent Pricing: No surprises; our service packages are tailored to business size and industry—with full cost clarity upfront.
- Book a Tax Consultant in Dubai: Reach out anytime via our hotline or website; consultations available for startups, SMEs, and multinationals ready for future growth.
Value to Your Business
- Ensure full compliance with all excise, VAT, and corporate tax rules.
- Avoid costly penalties or license issues due to late/incorrect filings.
- Enhance operational efficiency with integrated tax solutions.
- Receive real-time regulatory updates and proactive support for all new FTA requirements.
Contact My Taxman today at +971-543223140 to book a Tax Consultant in Dubai trusted by leading UAE businesses for excise tax expertise and comprehensive audit support.
The Future of Excise Tax in the UAE
- The UAE remains committed to public health, digital transformation, and world-class tax administration, reflected in more targeted excise taxes and high nationwide compliance rates.
- Businesses can expect ongoing changes—more item categories, dynamic updates as health data shifts, and increasing automation in compliance and audit.
- Record numbers of excise tax registrants and high corporate tax uptake (651,000+ by Sept 2025) confirm the resilience and adaptability of the UAE’s business ecosystem.
- The push for modern, digital systems (“Zero Digital Bureaucracy”) means easier filing but also faster, more accurate audit checks.
Conclusion
UAE Excise Tax is evolving rapidly, with the 2025 introduction of a tiered sugar-based tax on sweetened drinks redefining compliance for manufacturers, importers, and retailers nationwide. Excise tax compliance is non-negotiable for any business dealing with tobacco, energy drinks, sweetened beverages, and vaping products in Dubai and the UAE—failure to stay ahead means financial penalties, reputational risks, and business interruption.
My Taxman—your top-rated Tax Consultant in Dubai—offers unmatched expertise from registration, monthly filing, and product review to digital recordkeeping and audit defence. As recognised among the Best Tax consultants in Dubai for excise, VAT, and corporate tax advisory, we ensure your business remains not just compliant but competitive in the fast-changing UAE landscape.
Don’t wait for a penalty or audit notice—secure your compliance today. Book a Tax Consultant in Dubai with My Taxman for a personalized consultation and future-proof your business under the latest UAE Excise Tax rules.
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