Amendments on excise goods, rates revealed by UAE ministry
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In order to direct efforts towards reducing the negative effects of harmful consumption patterns, the UAE Ministry of Finance announced the details of the amendment of Cabinet Resolution No.(38) of 2017 regarding excise goods, excise tax rates and the formula to calculate the excise price.
In addition to the goods currently subject to excise tax (i.e. tobacco products, soft drinks and energy drinks), excise tax will also be imposed on e-cigarettes and the liquids used with them, as well as beverages sweetened with added sugar.
The decision to amend excise goods and the formula of calculating excise price is to achieve government directives in terms of rationalising consumer behaviour related to harmful products, which contributes to raising community members' public health levels, and reducing the negative health consequences caused by these products. This decision is in line with the UAE's commitment to implementing the GCC Unified Agreement for Excise Taxes and to complement efforts to achieve economic integration among the GCC countries.
Obaid bin Humaid Al Tayer, UAE Minister of State for Financial Affairs, pointed out that these new amendments to the Cabinet's decision on excise tax are part of the UAE's keenness to reduce harmful consumer practices by establishing a legislative and procedural base that supports national efforts to curb unhealthy practices that cause chronic diseases.
He said: "These amendments come in line with the government's orientation that excise tax policy targets consumption patterns harmful to public health, in order to complement efforts to raise awareness about the damaging effects of consumables harmful to health. It contributes to strengthening the health system's work in controlling prevalent diseases and reducing the cost of treating them, promoting community health, motivating individuals to spend effectively, reducing the negative impact of harmful substances on the environment and encouraging producers to develop better alternatives."
Pursuant to these amendments, effective January 1, 2020, a 100 per cent excise tax on electronic smoking appliances and liquids used in these devices, and 50 per cent excise tax on beverages and sugary drinks has been set. These goods were identified in addition to existing excise goods such as tobacco and tobacco products (100 per cent), energy drinks (100 per cent) and soft drinks (50 per cent).
The decision also specified the formula of calculating the excise and retail price, and the Federal Tax Authority (FTA) shall have the power to determine the procedures necessary to prove the classification of any product as an excise good.
At the same time, the Cabinet set the minimum standard price for tobacco products, which set the excise price of tobacco products not less than Dh0.40 per roll of cigarette, and Dh0.10 per gram of hookah tobacco, ready-to-use tobacco and similar products. The Minister of Finance will issue a decision on the implementation date, which is set to be before January 1, 2020.
Al Tayer said: "The Ministry of Finance conducted in-depth studies on the direct and indirect negative effects of health-harmful consumption patterns, including tobacco products, electronic tobacco and sugar-sweetened beverages. The cabinet decision aims to correct these harmful patterns and provide the appropriate legislation to regulate excise tax in order to achieve the government goals in ensuring the health and well-being of all members of the society and to achieve the third objective of the Sustainable Development Goals of ensuring healthy lives and promoting wellbeing for all at all ages."