Excise tax: what it means in UAE tax.

What excise tax means

Also called: Selective tax.

Excise tax is a federal tax on specific goods the Cabinet chooses to tax, usually because they are harmful to health. It is governed by Federal Decree-Law No. 7 of 2017 on Excise Tax, as amended, and it applies alongside VAT rather than instead of it. The list of taxed goods and the rates sit in a separate Cabinet Decision and are covered on the excise goods page.

The tax is charged when excise goods are produced in the UAE in the course of business, imported, released from a Designated Zone, or stockpiled in the UAE in the course of business. The person carrying out that activity is liable, and in some cases another person involved in the activity, or a warehouse keeper, can become liable if the tax was not paid.

Unlike VAT, there is no turnover threshold. A business must be registered before it imports, produces or stockpiles excise goods. Rates are set either as a percentage of the excise price or as a fixed amount per unit. The law caps percentage rates at 200% of the excise price and fixed amounts at AED 100 per unit. For SMEs in food, beverage or convenience retail, excise mainly matters when they import or make products themselves.

How it works

• Registration comes first: Article 5 prohibits carrying on a taxable activity before registering, and sets a 30 day window from the end of the month in which the activity starts or is planned.
• The tax period is the calendar month, and the return and payment are due by the 15th day of the following month.
• For goods taxed at 100%, the excise price is the higher of the FTA's published price and the designated retail sales price less the tax included, with the tax taken as half the retail price.
• Excise tax already paid can be deducted in set cases, such as goods later exported or used as a component of another excise good.
• On imports, excise tax paid forms part of the value on which import VAT is calculated.

Worked example

A Dubai importer brings in a consignment of energy drinks, which are taxed at 100%. Their designated retail sales price, before VAT, is AED 200,000 and no higher FTA published price applies.

Designated retail sales price before VAT	AED 200,000
Excise tax included (half the retail price)	AED 100,000
Excise price (retail price less the tax)	AED 100,000
Excise tax due at 100% of the excise price	AED 100,000

For goods taxed at 100%, the excise tax works out at half the shelf price before VAT.

Common mistakes

• Importing or producing excise goods before the excise registration is approved.
• Filing on the VAT quarterly rhythm; excise returns and payments are monthly, by the 15th.
• Forgetting that excise tax paid on import increases the value on which import VAT is charged.

The law

• Federal Decree-Law No. 7 of 2017 on Excise Tax, as amended, Article 2 (Application and Scope of Tax), Article 3 (Tax Calculation), Article 4 (Tax Obligations), Article 5 (Tax Registration) and Article 16 (Deductible Tax)
• Cabinet Decision No. 37 of 2017 (Excise Tax Executive Regulation), as amended, Article 17 (Length of Tax Period), Article 18 (Tax Return) and Article 19 (Tax Payment)
• Cabinet Decision No. 197 of 2025, Article 11 (Excise Price)

Frequently asked questions

Is there a registration threshold for excise tax?

No. Any business that imports, produces or stockpiles excise goods in the course of business must register before it starts, whatever its size.

Does a shop selling excise goods need to register?

Not simply for selling goods on which excise tax has already been paid by the importer or producer. It can become liable if it imports or produces the goods itself, or if the tax was not paid earlier in the chain.

Related terms

Excise goods · Import VAT · Designated zone · Tax registration number. See every term in the UAE tax glossary.

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