Excise Tax in the UAE 2026: Rates, Registration & Filing Guide

The UAE introduced Excise Tax on 1 October 2017 under Federal Decree-Law No. 7 of 2017 to reduce the consumption of products considered harmful to health or the environment and to support government revenue.

The tax applies to specific excise goods, including tobacco products, carbonated drinks, energy drinks, electronic smoking devices, vaping liquids, and products with added sugar or sweeteners.

Businesses involved in importing, producing, stockpiling, or releasing excise goods in the UAE must comply with Federal Tax Authority (FTA) requirements, including registration, tax payment, record keeping, and filing tax returns.

This guide covers the key aspects of Excise Tax in the UAE, including taxable goods, tax rates, exemptions, registration requirements, filing obligations, and the differences between Excise Tax and VAT.

What Is Excise Tax in the UAE?

The United Arab Emirates Excise Tax is an indirect tax imposed on specific goods considered harmful to public health or the environment. It was introduced under the UAE Excise Tax Decree-Law and came into effect on 1 October 2017.

The tax applies to selected products known as “Excise Goods,” including tobacco products, electronic smoking devices, energy drinks, carbonated drinks, and sweetened beverages. Excise Tax is imposed on activities such as importing, producing, releasing goods from designated zones, and stockpiling excise goods during the course of business.

Businesses engaged in these activities are generally required to register with the Federal Tax Authority (FTA), file tax returns, maintain records, and pay any tax due in accordance with the law.

Why Does the UAE Apply Excise Tax?

The UAE applies an Excise Tax to reduce consumption of products that may adversely affect public health or the environment. By increasing the prices of products such as tobacco, energy drinks, sweetened beverages, and electronic smoking devices, the government aims to encourage healthier consumer behavior and reduce demand for harmful goods.

Another purpose of the Excise Tax is to generate government revenue that can support public services and development initiatives. The tax also strengthens regulatory oversight on the import, production, storage, and movement of excise goods within the country.

In addition, the Excise Tax system improves compliance and transparency by requiring businesses to register, file tax returns, maintain proper records, and follow strict procedures for taxable goods and designated zones.

Which Goods Are Subject to Excise Tax in the UAE?

The United Arab Emirates Excise Tax applies to specific goods considered harmful to health or the environment. These goods include:

• Tobacco and tobacco products
• Electronic smoking devices and tools
• Liquids used in electronic smoking devices
• Carbonated drinks, excluding sparkling water
• Energy drinks
• Sweetened drinks

These products are classified as “Excise Goods” under the UAE Excise Tax law and are subject to tax upon import, production, release from a designated zone, or stockpiling during the course of business.

What Are the Excise Tax Rates in the UAE?

The UAE Excise Tax law states that the tax rates on excise goods are determined through a Cabinet Decision issued upon the recommendation of the Minister of Finance. The law also provides that the Excise Tax rate cannot exceed 200% of the goods' excise price.

The exact applicable rates depend on the category of excise goods specified by the UAE authorities.

When Does Excise Tax Become Due?

Excise Tax becomes due on the following dates:

• On the date of importing excise goods into the UAE
• On the date excise goods are acquired by a stockpiler
• On the date excise goods are released for consumption, according to the Executive Regulation

The law also states that tax becomes payable when activities such as importing, producing, releasing from a designated zone, or stockpiling excise goods take place.

Who Is Liable to Pay Excise Tax?

The responsibility for paying the excise tax generally falls on:

• The person importing excise goods
• The person producing excise goods in the UAE
• The person releasing excise goods from a designated zone
• A stockpiler holding excise goods in the course of business
• A warehouse keeper, in certain cases, where goods are released from a designated zone, and tax has not already been paid

In some situations, any person involved in taxable activities may also become liable if the original responsible party fails to pay the tax.

How Is Excise Tax Calculated in the UAE?

Under the UAE Excise Tax law, the payable tax for a tax period is calculated as:

The total due tax on excise goods - The total deductible tax allowed under the law

Deductible tax may include:

• Tax paid on exported excise goods
• Tax paid on excise goods used as components in other excise goods
• Amounts paid to the Federal Tax Authority in error

The Cabinet also determines the method for calculating the excise price of goods.

Are There Exemptions or Reliefs Under UAE Excise Tax?

Yes, the UAE Excise Tax law provides certain exemptions and reliefs.

Excise goods exported outside the UAE may qualify for tax exemption, subject to the conditions set out in the Executive Regulation.

The law also allows deductible tax and tax refunds in specific cases, including:

• Tax paid on exported excise goods
• Excess refundable tax carried forward to future tax periods
• Refunds for foreign governments, diplomatic bodies, and certain international organizations under approved conditions
• Refunds related to exports to GCC implementing states

What Is a Designated Zone Under Excise Tax?

A Designated Zone is a fenced area intended to operate as a free zone and can only be entered or exited through designated access points. Under the Excise Tax law, a designated zone may be treated as outside the UAE for tax purposes if it meets the conditions stated in the Executive Regulation.

Excise goods can generally be transferred between designated zones without triggering Excise Tax, provided the required conditions and controls are met.

The law also requires designated zones to operate under the supervision of an approved warehouse keeper registered with the Federal Tax Authority.

Do Businesses Need to Register, File Returns, and Pay Excise Tax?

Yes. Businesses involved in importing, producing, releasing, or stockpiling excise goods must register for Excise Tax before conducting taxable activities.

According to the law:

• Registration must generally be completed within 30 days from the end of the month in which the business starts or intends to start taxable activities
• Taxable persons must submit Excise Tax returns at the end of each tax period
• Payable tax must be settled on the same date the tax return is submitted

Businesses that fail to comply with registration, filing, or payment obligations may face administrative penalties.

What Records Must Businesses Keep for Excise Tax?

Businesses dealing with excise goods are required to maintain detailed records, including:

• Records of produced, imported, and stockpiled excise goods
• Records of exported excise goods and supporting export evidence
• Stock records, including damaged, lost, or destroyed goods

• Tax records showing:

  a) Due tax on imported goods

  b) Due tax on produced goods

  c) Due tax on stockpiled goods

  d) Deductible tax amounts

The Executive Regulation determines the retention period and detailed record-keeping requirements.

Common Excise Tax Mistakes Businesses Should Avoid

Businesses should avoid several common compliance mistakes under the UAE Excise Tax system, including:

• Conducting taxable activities before registering for Excise Tax
• Failing to submit tax returns on time
• Delaying payment of payable tax
• Not maintaining proper records and supporting documents
• Incorrectly transferring excise goods between designated zones
• Failing to display prices inclusive of Excise Tax where required
• Providing incorrect tax information or false records
• Attempting to avoid tax through unlawful practices, which may be treated as tax evasion under the law

Non-compliance may result in administrative penalties and additional legal consequences.

Excise Tax vs VAT in the UAE

Excise Tax and VAT are both indirect taxes in the UAE, but they apply differently.

How Daftra Helps Businesses Manage Excise Tax More Efficiently

Managing Excise Tax in the United Arab Emirates requires accurate record-keeping, proper tax calculations, and compliance with the Federal Tax Authority's regulations. Daftra accounting software helps businesses simplify these tasks through automated accounting and cloud-based financial management tools.

1- Automated Tax Calculations

Daftra automatically applies the appropriate UAE tax structure to invoices and transactions, helping businesses reduce manual calculations and minimize tax errors while managing Excise Tax, VAT, and Corporate Tax requirements.

2- Accurate Financial Records

The system automates journal entries, organizes the chart of accounts, tracks cash and bank transactions, and efficiently manages cost centers. This helps businesses maintain clear and audit-ready financial records for excise-related activities.

3- FTA-Compliant Reporting

Daftra provides detailed accounting and tax reports aligned with UAE tax regulations, including profit and loss statements, balance sheets, tax reports, and general ledger reports, making compliance and reporting easier.

4- Cloud-Based Access and Financial Control

As a cloud-based platform, Daftra gives businesses real-time access to accounting data and financial reports from anywhere, helping them monitor excise-related transactions and manage finances more efficiently.

5- Simplified Compliance

By centralizing accounting operations and automating tax-related processes, Daftra helps businesses reduce compliance risks, improve accuracy, and manage Excise Tax obligations more effectively.

6- Manage Excise Tax Reporting and Generate Official Excise FAF Audit Files

Daftra helps businesses handling excise goods simplify excise tax compliance by providing a dedicated Excise Tax Audit File reporting system fully aligned with the requirements of the UAE Federal Tax Authority (FTA). Through the platform, businesses can generate and export official Excise FAF audit files containing excise tax transactions and inventory movement records for a selected reporting period.

The exported file includes detailed excise-related data, such as invoices, returns, debit and credit notes, and stock movement records for excise goods. It also automatically generates the Stock File required for excise tax audits, including warehouse details, product codes, tax rates, transaction types, inventory adjustments, customs status, and movement history.

FAQs About Excise Tax in the UAE

What is the meaning of excise tax in UAE?

The definition of an excise tax in the UAE is an indirect tax levied on specific goods, usually products considered harmful to health or the environment, with the cost generally passed on to consumers through higher prices. 

What is the formula for excise duty?

Under the UAE Excise Tax system, payable excise tax is generally calculated as:

the price of the product × tax rate × quantity = tax liability

The applicable tax rate is determined by the category and excise price of the goods.

Is excise the same as VAT?

No. Excise Tax and VAT are different types of indirect taxes. Excise Tax applies only to selected harmful products, while VAT is a broad consumption tax applied to most goods and services in the UAE.

What is the excise tax return in UAE?

An Excise Tax return is the tax filing submitted to the Federal Tax Authority (FTA) by registered businesses that deal in excise goods. It includes details of taxable activities, excise goods, and the tax due for the tax period. Returns are generally filed monthly through the EmaraTax platform.

Is excise duty a type of tax?

Yes. Excise duty is an indirect tax imposed on specific goods, such as tobacco products, sweetened drinks, and energy drinks.

Is excise duty included in the cost of goods sold?

Excise duty is generally treated as part of the product cost because it increases the overall cost of importing or producing excise goods before they are sold.

Who should register for excise tax in the UAE?

Any business involved in importing, producing, stockpiling, or overseeing excise goods such as tobacco, energy drinks, carbonated drinks, sweetened beverages, or electronic smoking devices in the United Arab Emirates must register for Excise Tax with the Federal Tax Authority. This also includes warehouse keepers responsible for designated zones or excise warehouses.

What is another word for excise tax?

Excise tax is also known as a duty or sin tax because it is an indirect tax imposed on specific goods, particularly products considered harmful to health or the environment.

How much is excise tax in Dubai?

Excise Tax rates in Dubai and across the United Arab Emirates currently include:

• 100% on tobacco products
• 100% on energy drinks
• 100% on electronic smoking devices and related liquids
• 50% on carbonated drinks
• 50% on sweetened beverages

What is the difference between GST and excise tax?

GST is a general consumption tax applied to most goods and services, while Excise Tax applies only to specific products considered harmful to health or the environment, such as tobacco and energy drinks.

Are excise tax and indirect tax the same thing?

Excise Tax is a type of indirect tax, but not all indirect taxes are Excise Taxes. Other examples of indirect taxes include VAT and GST.

What is the difference between a percentage tax and an excise tax?

A percentage tax is generally applied as a percentage of the value or selling price of goods and services. Excise Tax specifically targets selected products and may apply at higher rates depending on the type of excise goods.

What is an example of a product with an excise tax?

Examples of products subject to Excise Tax in the UAE include:

• Tobacco products
• Energy drinks
• Carbonated drinks
• Sweetened beverages
• Electronic smoking devices and vaping liquids

When did the excise tax start in the UAE?

Excise Tax was introduced in the United Arab Emirates in 2017 and came into effect on 1 October 2017.

Conclusion

Excise Tax in the United Arab Emirates helps reduce the consumption of harmful products while supporting government revenue and public services. Businesses dealing with excise goods must comply with the Federal Tax Authority's registration, filing, payment, and record-keeping requirements to avoid penalties and maintain proper compliance.

Understanding the difference between Excise Tax and VAT is also essential for accurate pricing, reporting, and financial management. With accounting solutions like Daftra, businesses can simplify Excise Tax management through automated calculations, organized records, and compliant financial reporting.