Tobacco, fizzy drinks to cost double from Oct 1
Dubai - Under the new law, items carried out of the country by travellers will not come under excise.
By Waheed Abbas
Published: Tue 22 Aug 2017, 11:10 PM
Last updated: Sun 27 Aug 2017, 2:40 PM
Prices of soft drinks, energy drinks and tobacco will shoot up when excise will come into force from October 1 in the UAE.
Younis Haji Al Khouri, undersecretary at the ministry of finance, said excise on fizzy drinks will be hiked by 50 per cent and that on tobacco and energy drinks by 100 per cent in order to discourage the consumption of harmful products by residents as well as to protect the environment.
He said that under the new law, items carried out of the country by travellers will not come under excise but those which are brought into the country for consumption will be taxed.
In June 2016, the finance ministers of the Gulf Cooperation Council (GCC) approved a unified agreement for the development of national regimes for excise. As part of the GCC agreement, Saudi Arabia started implementing excise from June 2017 at the same rate as the UAE. He explained that the tax would be implemented across the country, including free zones and ports.
On Monday, the President, His Highness Sheikh Khalifa bin Zayed Al Nahyan, issued Federal Decree Law No. 7, 2017, which states that the tax rates do not exceed 200 per cent of the excise price.
Nimish Makvana, partner at Crowe Horwath, said the tax on tobacco, soft drinks and energy drinks would discourage the consumption of products that negatively impact the environment and, more importantly, people's health, while the additional source of government revenue will strengthen activities and initiatives for the welfare of society, keeping the growth of economy in mind.
"The introduction of excise tax will have an impact on consumption, and sales may drop to some extent due to additional burden on end-consumers with the imposition of tax," he added.
Biraja Jena, chairman and managing director, Imperial Capital Investments, said the indirect tax will be collected from manufacturers/producers or importers who shall come under its ambit and then passed on to the consumers, hence costing the end-users more.
The new taxes are expected to add around Dh7 billion to the federal budget, Al Khouri was quoted as saying by the Wam news agency.
Once the excise tax law is implemented, businesses will be required to file an excise tax return every month. Due taxes must be paid within 15 days of the end of every month. Filing and paying will be done online, global consultancy KPMG said in a note released in May.
Khalid Al Bustani, director general of the Federal Tax Authority, earlier said that 21 specialised workshops on value-added tax (VAT) and excise tax will be organised in the second phase of the tax system's awareness campaign.