UAE residents to pay double for tobacco products

Dubai - A pack of 20 cigarettes will now set smokers back about Dh22, while high-in-sugar soft drinks will cost upwards of Dh2.25

From today, residents across the country with a love for sugary drinks and cigarettes will be feeling the pinch, as the UAE's excise tax comes into effect.

Commonly referred to as a "sin" tax, it now means residents will be paying double the price for tobacco products and caffeinated drinks, while sugary drinks will increase by 50 per cent.

Products mentioned are just a sample. Prices will go up across the respective categories

Depending on the brand, a pack of 20 cigarettes will now set smokers back about Dh22, while high-in-sugar soft drinks will cost upwards of Dh2.25.

When Khaleej Times visited supermarkets to check the price of several products set to increase under the Federal Tax Authority's (FTA) new decree-law, a 330ml can of Coca Cola cost Dh1.50; a 20-pack of Marlboro Lights cost Dh10; and a can of Red Bull cost Dh5.50 in one store, and Dh6.50 in another.

But from today, the Coca Cola will now be priced at Dh2.25; the Marlboro Lights at Dh20; and the Red Bull Dh11 and Dh13, respectively.

Although smokers will now be forking out 100 per cent more for a packet of cigarettes, the new price is still lower than in places like the UK and USA.

With the implementation of VAT, set to take effect in three months, today will mark the beginning of a new era in the UAE's 46-year history.

Introduced as a way of discouraging the consumption of goods that damage people's health, the excise move has been welcomed by many, including health professionals. And although it may prove to be a costly move for some, on the bright side, it could help curb a lot of bad habits.

The tax affects specific "excise" goods that are produced in the UAE, imported into it or stockpiled in the Emirates, as well as excise goods released from a designated zone.

The shop manager of a small supermarket chain in Dubai said cigarettes, carbonated drinks and energy drinks are some of the biggest sellers in his store.

"It will be interesting to see if this tax changes that sales trend. I don't know if people will want to pay double the price for the likes of a fizzy drink or energy drink anymore."

And when asked if they had ordered extra stock to take advantage of the price hike, he said no.

"According to the rules from the Dubai Municipality, we can only order one month's stock. I guess this is to deter people from cashing in on the newly priced goods." kelly@khaleejtimes.com

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Below are important points about Excise Tax:

Price after Excise Tax

- 930 on tobacco products

- 930 on energy drinks

- 50% on carbonated drinks

Where Excise Tax will be charged

- Production of excise goods in the UAE

- Import of excise goods in the UAE

- Release of excise goods from a designated zone

- Stockpiling of excise goods in the course of conducting business

What businesses should need to know about Excise Tax

1. Keep records audited by an auditor certified in the UAE

2. Violations of the Excise Tax legislation will be subject to penalties

3. Excise goods in the registered designated zones will not be charged until released from the zone

4. A designated zone, either a fenced free zone or any warehouse in the UAE, and a warehouse keeper may be registered from October 1, 2017

5. Businesses will have to registered themselves for Excise Tax

6. Every person registered for Excise Tax will have to submit a return for all transactions within the tax period (one month) within 15 days after the tax period

7. A producer of Excise goods will need to complete a monthly declaration stating the excise goods produced, the quantity and the destination

• UAE