The Federal Tax Authority (FTA) has called on all businesses registered for Excise Tax to comply with the minimum price that has been fixed for tobacco products and update it in the Authority’s system, as determined in Cabinet Decision No. (55) of 2019 on the Excise Price for Tobacco Products.
The Decision stipulates that Excise Price cannot be set under AED0.4 (40 fils) for one cigarette. Meanwhile, the minimum price for waterpipe tobacco (known in Arabic as ‘Mu’assel’) was set at AED0.1 (10 fils) per gram.
The Federal Tax Authority stressed that enforcing a minimum Excise Price for cigarettes and other tobacco products serves to accomplish two strategic objectives: Protect consumers and the community from products that damage public health and the environment, and prevent price manipulation for the purpose of tax evasion.
The FTA noted that as per Cabinet Decision No. (55) of 2019, the minimum standard price for a pack of 20 cigarettes has been set at AED8. Meanwhile, the minimum standard price for waterpipe tobacco and similar products has been set at AED25 for every 250 grams (AED100 per kilo). This applies to all brands of cigarettes and locally traded tobacco products.
In a press statement issued today, the Authority asserted that Cabinet Decision No. (52) for 2019, which goes into effect on December 1, 2019, is part of UAE government’s efforts to build a safe and healthy community by limiting the consumption of products that harm individuals’ health, as well as the environment. These reforms also contribute to increasing financial resources to support the government’s efforts to improve services provided to UAE residents and visitors, and ensure their wellbeing.
The Decision places a 100% Excise Tax on tobacco and tobacco products, as well as electronic smoking devices and liquids, and energy drinks. Meanwhile, carbonated beverages and sweetened drinks are subject to a 50% Excise Tax.
The Authority explained that as per Cabinet Decision No. (52) of 2019 on Excise Goods, Excise Tax Rates and the Methods of Calculating the Excise Price, Excise Price is defined as the higher of two figures: the price published by the Authority for the Excise Good in a standard price list that it issues, if available, and the designated retail sales price for the Excise Good, minus the tax included therein.
Meanwhile, the designated retail sales price is determined as the higher of the following: the recommended selling price of the Excise Good as declared and displayed on the items by the importer or producer (after deducting VAT); and the recommended selling price of the Excise Good, which means the price of the Excise Good when sold directly to the consumer, as opposed to cases where the price increased as a result of the sale taking place in a hotel, restaurant, or similar establishment for the purpose of consumption inside these premises.
The statement noted that the Authority reserves the right to determine the procedures required to prove whether or not the product should be classified as an Excise Good, as well as the procedures required to add a product to the published price list. Where a Person fails to provide the required documents within the specified timeframe, the Authority may consider the product as an Excise Good that is subject to the provisions of the Decree-law, until proven otherwise.
In September 2019, the Authority launched a comprehensive awareness campaign on ‘The Objectives and Mechanisms of Expanding the Scope of Excise Tax, and Registration Procedures in the FTA’s Electronic Tax System’, which covered all businesses in the UAE that are subject to the new tax – whether registered for Excise Tax or not. The campaign consists of multiple workshops led by FTA experts to showcase the developments that have taken place with regards to Excise Tax since its launch in October 2017.
The Federal Tax Authority explained that the electronic smoking devices mentioned in Cabinet Decision No. (52) of 2019 include any e-cigarette devices, tools, and the like, whereas electronic smoking liquids include all liquids used in electronic smoking devices, whether or not they contain nicotine or tobacco. The Authority noted that as per the Decision of Minister of Finance No. (236) of 2019, Excise Tax will be collected on electronic smoking devices and liquids, according to the Customs HS codes related to e-cigarettes, e-shisha, and other related products.