Excise Tax in the UAE Explained: What You Need to Know in 2025

The Excise tax UAE is an indirect tax imposed on specific goods that are harmful to human health or the environment. Unlike VAT, which applies broadly across most goods and services, excise tax targets particular products such as tobacco, sugary drinks, and e-cigarettes.

Globally, many countries use excise taxes to:

• Discourage unhealthy consumption

• Raise revenue for public health initiatives

• Align with international sustainability goals

Overview of Excise Tax in the UAE

The UAE introduced excise tax in October 2017 as part of its economic diversification strategy and commitment to public health. The Federal Tax Authority (FTA) oversees its implementation, compliance, and enforcement.

It’s a self-assessment system, meaning businesses must register, calculate, file, and pay the tax themselves through the FTA portal.

Products Subject to Excise Tax in 2025

As of 2025, excise tax in the UAE applies to the following categories:

Note: The UAE government periodically reviews the list. In 2025, there are discussions about potentially including high-caffeine products or additional environmental pollutants.

Purpose of Excise Tax Implementation

The primary goals behind the tax are:

• Reducing harmful consumption: Encouraging the public to choose healthier alternatives

• Public health protection: Supporting national health campaigns by reducing risk factors like obesity and smoking

• Revenue generation: Diversifying income streams beyond oil and enabling sustainable infrastructure development

Excise Tax Rates in the UAE for 2025

The rates in 2025 remain consistent with previous years:

• 100% on tobacco, e-cigarettes, and energy drinks

• 50% on carbonated and sweetened beverages

However, there’s heightened enforcement, and digital compliance tools have been introduced for tracking and reporting accuracy.

Who Must Register for Excise Tax?

If you’re involved in the production, importation, or storage of excise goods in the UAE, you must register. This includes:

• Manufacturers (local and international)

• Importers

• Stockpilers with excise goods for resale

• Warehouse keepers managing designated storage areas

Foreign businesses operating through UAE distributors may also have registration obligations.

How to Register for Excise Tax in the UAE

Registration is done through the FTA’s online portal. Here’s a quick overview of the steps:

1. Create an account on the FTA website

2. Fill in the Excise Tax Registration Form

3. Upload supporting documents (trade license, Emirates ID, financials)

4. Await review and approval (typically within 20 business days)

Delays may occur if the information is incomplete or inconsistent.

Filing and Payment Procedures

Excise tax filings are typically quarterly, with deadlines set at the end of the month following each tax period. Businesses must:

• File returns via the FTA portal

• Pay dues electronically through approved payment channels

Late filing leads to monetary penalties and potential suspension of your tax account.

Impact on Businesses and Consumers

For Businesses:

• Increased operational overhead due to compliance

• Need for regular system audits and documentation

• Possible supply chain price adjustments

For Consumers:

• Noticeable price hikes on taxed goods

• Encouragement to switch to healthier, tax-free alternatives

Transparency in pricing is legally required—meaning excise amounts must be included in product tags.

Common Challenges in Excise Tax Compliance

1. Improper Recordkeeping – Missing purchase logs or inaccurate stock data

2. Incorrect Product Classification – Mislabeling items or underreporting taxable units

3. Late Filings – Resulting in fines and reputational damage

Staying informed and using ERP systems with built-in tax modules can help businesses remain compliant.

Penalties for Non-Compliance in 2025

The FTA has increased its audit activity in 2025, making non-compliance riskier than ever.

Exemptions and Special Cases

Certain entities and situations qualify for exemptions:

• Diplomatic and international organizations

• Goods held in designated zones (free zones with FTA authorization)

• Goods that are re-exported

However, pre-approval and strict documentation are essential.

Future Outlook for Excise Tax in the UAE

2025 may witness:

• Expansion of the excise list to include high-sodium or high-caffeine items

• Introduction of AI tools to track supply chain tax compliance

• Stronger collaboration with global health agencies

The UAE remains committed to using tax policy as a tool for behavioral change and fiscal diversification.

FAQs on UAE Excise Tax in 2025

Q1: Is excise tax refundable?
No, unless the goods are exported or held under exempt conditions.

Q2: Can small businesses be exempt?
Not automatically. If they deal in excise goods, they must register.

Q3: What is the difference between VAT and excise tax?
VAT applies broadly; excise tax targets harmful products with higher rates.

Q4: Can I register as a warehouse keeper separately?
Yes, through the FTA’s Designated Zones registration form.

Q5: How are penalties calculated?
Based on time, severity, and repeat offense history.

Q6: Can I get help with filing?
Yes, certified tax consultants and advisors can assist with registration and compliance.

Conclusion: Staying Compliant in 2025

Understanding and complying with excise tax in the UAE is essential for both businesses and consumers in 2025. As the government pushes for healthier lifestyles and economic diversification, being proactive with tax responsibilities ensures you stay ahead of the curve.

✅ Register early
✅ File accurately
✅ Price transparently

By doing so, you protect your operations, avoid penalties, and contribute to national goals.