Why UAE residents won’t buy cigarettes for friends from duty free anymore

Dubai - Excise duty on carbonated drinks, energy drinks and tobacco is applicable in all the public shops at the airport.

UAE residents who used to buy cigarettes in bulk from duty free shops for friends back home while visiting them will now cut down on tobacco purchases due to the imposition of excise tax from October 1.
Residents told Khaleej Times that they used to buy cigarettes for friends, carbonated drinks and energy drinks for personal consumption from duty free while flying out, but will now cut down on these purchases due to "sin tax." They will still buy cigarettes for personal consumption, though, they said.
Kashif Hassan, a Dubai resident for five years, has been regularly buying cigarettes for friends and for personal consumption but says now he will purchase only for "personal consumption" due to the higher price.
"I used to buy around 4 big packets of 400 cigarettes from duty free as I smoke, especially when I'm with friends. When I go back to my country, my friends request me to bring cigarettes, too. But because of the weight problem, I used to buy from duty free. But now I'm thinking of buying only for personal consumption - not for friends - because it's too costly. Moreover, now the prices in Pakistan are almost at par with the prices here," said Hassan.
Amin-ur-Rehman, a 26-year-old resident of Dubai, said he would certainly not buy tobacco anymore for friends.
"Even earlier, I used to hesitate to buy cigarettes because I don't smoke; but because of friends' insisting to bring branded cigarettes, I used to buy for them. But not anymore, now," he said.
The UAE implemented 50 per cent excise tax on carbonated drinks and 100 per cent on energy drinks and tobacco products from October 1 in order to develop a healthy society and quality lifestyle of the residents.
Dubai Duty Free said departing and arriving passengers will pay excise duty on carbonated drinks and energy drinks in line with the Federal Tax Authority guidelines.
However, excise duty will only be charged on tobacco if the buyer exceeds the current allowance of 400 cigarettes, in which case the passenger would pay 100 per cent excise duty on the additional only, Dubai Duty Free said in a statement.
Excise duty on carbonated drinks, energy drinks and tobacco is applicable in all the public shops at the airport.
Dubai Duty Free's sales reached record $1.85 billion (Dh6.673 billion) at 2016-end. Colm McLoughlin, executive vice-chairman and CEO of Dubai Duty Free, projected earlier that the group's turnover would reach $3 billion by 2022.
Commenting on the impact, Dubai Duty Free said any uplift in revenue remains to be seen but predictors show that price sensitivities have some impact on demand generally. "But we are hoping that this will be offset by the price differential between duty free and domestic prices," it said.
"We forecast that there may be some impact on consumption due to the increase in excise duty on carbonated and energy drinks as predicted by the FTA. Due to the price differential between downtown and duty free prices on tobacco products we expect some uplift in sales demand," it said in a statement.
waheedabbas@khaleejtimes.com