How To Calculate Excise Tax On UAE Imports

If you import tobacco, energy drinks, vaping products, or sweetened beverages into the UAE, excise tax applies before customs duty and VAT even enter the picture. The rates are steep. Tobacco and energy drinks face 100% tax. Sweetened drinks now follow a tiered system based on sugar content. And compliance obligations start before your first shipment clears customs.

This guide covers what importers need to know about which products are taxable, how to calculate liability, and what changes took effect in January 2026.

What Is Excise Tax?

Excise tax is an indirect tax on goods considered harmful to health or the environment. Unlike VAT, which applies at each stage of the supply chain, excise tax is charged once at the point of import, production, or release from a designated zone.

The Federal Tax Authority administers excise tax under Federal Decree-Law No. 7 of 2017. Cabinet Decision No. 197 of 2025, which came into force on 1 January 2026, updates the framework with new product definitions and introduces a tiered tax model for sweetened drinks.

Products Subject to Excise Tax

The following are excluded from excise tax: unflavoured aerated water, 100% natural fruit or vegetable juice with no added sugar, beverages containing at least 75% milk or milk substitutes, and beverages prepared in restaurants and served in open containers for immediate consumption.

2026 Change: Tiered Volumetric Model for Sweetened Drinks

The most significant change for importers this year is the shift from flat-rate to sugar-based taxation for sweetened beverages.

Under Cabinet Decision No. 197 of 2025:

Total sugar content includes added sugars (white sugar, brown sugar, glucose syrup), natural sugars present in ingredients, and other sweeteners. Artificial sweeteners like aspartame, sucralose, and acesulfame-K are excluded from the calculation.

There is a critical compliance requirement here. Importers must obtain an Emirates Conformity Certificate for Sugar and Sweeteners Content from the Ministry of Industry and Advanced Technology. This requires laboratory testing at a UAE-accredited facility. Without the certificate, products are automatically classified as high-sugar and taxed at the maximum rate until you prove otherwise.

Carbonated drinks no longer exist as a separate tax category. From 2026, they fall under the sweetened drinks framework based on sugar content. A carbonated beverage with no added sugar or sweeteners falls outside the scope of excise tax entirely.

Energy drinks remain unchanged at 100% of retail price regardless of sugar content.

Registration Requirements

Any business that imports, produces, stockpiles, or releases excise goods in the UAE must register with the FTA before starting these activities. There is no registration threshold. Even a single import of excise goods triggers the requirement.

Registration applies to importers, producers, businesses stockpiling excise goods in the UAE, and warehouse keepers operating designated zones.

To register, create an account on the FTA's EmaraTax portal, complete the excise tax registration application, upload required documents (trade license, certificate of incorporation, customs details), and submit for FTA review. You will receive a Tax Registration Number upon approval.

Register before your first import. Importing excise goods without registration attracts a penalty of AED 10,000.

Calculating Excise Tax on Imports

Excise tax is calculated using the ad valorem method, meaning a percentage of the excise price.

The excise price is the higher of the FTA's published standard price (if one exists for the product) or the designated retail sales price minus any tax already included.

The designated retail sales price is determined by the importer's or producer's recommended selling price (excluding VAT) or the average market retail price.

For imports, the excise price cannot be lower than the CIF value (Cost, Insurance, Freight) plus any customs duty. If your retail-based calculation produces a lower figure, you must use the CIF-based figure instead.

Calculation Examples

Energy drinks (100% rate)

You import energy drinks with a CIF value of AED 50,000. The designated retail sales price (excluding VAT) is AED 120,000. The excise price is AED 120,000 since it is higher than CIF. For 100% rate items, excise tax equals 50% of the excise price, so the tax is AED 60,000. The tax effectively doubles the cost.

Sweetened drinks (tiered model)

You import 10,000 litres of fruit juice concentrate with 6g sugar per 100ml. This falls into the medium tier at AED 0.79 per litre. Excise tax is 10,000 multiplied by AED 0.79, which equals AED 7,900.

Tobacco (100% rate)

You import cigarettes with a CIF value of AED 100,000 and a designated retail sales price of AED 250,000. The excise price is AED 250,000. Excise tax is 50% of that, which equals AED 125,000.

Using Designated Zones to Defer Tax

A designated zone is a fenced area, typically a bonded warehouse or free zone, that is treated as outside the UAE for excise tax purposes. Goods stored in a designated zone are not subject to excise tax until released for consumption in the UAE market.

This gives importers flexibility on cash flow. You can import excise goods, store them in a designated zone, and pay tax only when the goods are released.

Requirements include physical fencing with controlled entry and exit, CCTV and customs or warehouse keeper oversight, FTA-approved inventory tracking, a financial guarantee (amount set by FTA), and annual registration renewal.

Excise tax triggers when goods leave a designated zone for UAE consumption, whether released to market, transferred to a non-designated area, or consumed within the zone. Transfers between designated zones do not trigger tax if properly documented.

Import Procedures

Step 1: Register for Excise Tax. Complete FTA registration and obtain your TRN before importing.

Step 2: Register Products with FTA. Register each product in the FTA's Excise Goods Registration Portal with product details, HS code, sugar content (with lab certification for beverages), and proposed retail price.

Step 3: Obtain Sugar Conformity Certificate (for beverages). For sweetened drinks, submit lab test results to MoIAT and upload the Emirates Conformity Certificate to EmaraTax.

Step 4: Clear Customs and Pay. Submit your import declaration with commercial invoice, packing list, bill of lading, certificate of origin, and FTA product registration. Pay excise tax through EmaraTax unless goods enter a designated zone. Standard customs duty (5%) and VAT (5%) apply in addition.

Filing Returns and Payment

The tax period is monthly. Filing deadline is the 15th day of the month following the tax period.

Your return should report excise goods imported during the period, excise goods produced, excise goods released from designated zones, and excise tax due.

Payment is due on the same date as the return. File and pay through EmaraTax.

Penalties

Cabinet Decision No. 129 of 2025, effective 14 April 2026, harmonises excise tax penalties with VAT and corporate tax.

If you identify errors and correct them voluntarily before an FTA audit, penalties are significantly reduced. The new regime rewards proactive compliance.

Refunds

Excise tax refunds are available only for exported goods (with proper export documentation and FTA approval) and destroyed goods (under FTA supervision with prior approval).

No refund is available for excise goods sold locally. The tax is a final cost.

How Excise Tax Interacts with Other Taxes

When you import excise goods, multiple taxes apply in sequence. Excise tax is calculated first on the excise price. Customs duty follows, typically 5% of CIF value though this varies by product. VAT comes last at 5% of the combined CIF value, customs duty, and excise tax.

This example assumes tobacco with CIF value of AED 100,000 and retail price of AED 250,000. The layered taxation significantly increases the final cost of excise goods.

Compliance Checklist for Importers

Before your first import, register for excise tax with FTA and obtain your TRN, register products in the FTA portal, obtain sugar conformity certificates for beverages, set up your EmaraTax account for filing and payment, and if using a designated zone, register as warehouse keeper.

For each import, verify product registration is current, calculate excise tax liability, submit your import declaration, pay excise tax or defer via designated zone, and clear customs.

Monthly, file your excise tax return by the 15th, pay any tax due by the 15th, and maintain records of all excise goods movements.

On an ongoing basis, monitor FTA updates on standard prices, renew designated zone registration annually, update product registrations if formulations change, and retain records for five years.

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