Excise tax is a specialized consumption tax in the UAE targeting specific goods that are typically harmful to human health or the environment. From a business perspective, it is critical to understand that Excise Tax does not have a registration threshold. Unlike VAT, where a business only registers after reaching AED 375,000 in turnover, Excise Tax requires registration as soon as any commercial activity involving excisable goods begins.
Determining Your Business Liability
Any person or legal entity conducting specific activities must register through the EmaraTax portal. This includes businesses that import excise goods into the UAE from abroad or locally produce these goods through manufacturing or bottling. Liability also extends to “Stockpilers”—businesses that hold a significant quantity of excise goods for commercial sale for which the tax has not yet been paid. Additionally, “Warehouse Keepers” responsible for managing Designated Zones where tax-suspended goods are stored are also required to register and maintain precise inventory records.
Product Categories and 2026 Shift
As of early 2026, the UAE has significantly updated its tax structure for beverages. The previous flat 50% rate has been replaced by a Tiered Volumetric Model for sweetened drinks. Under this new system, the tax is calculated based on the sugar content per liter. Drinks with 8g or more of sugar per 100ml are taxed at approximately AED 1.10 per liter, while moderate-sugar drinks (between 5g and 7.99g) are taxed at AED 0.80 per liter. Drinks with less than 5g of sugar or those using only artificial sweeteners are now effectively exempt from the tax, though the products must still be registered in the FTA system.
Other categories remain at a fixed percentage of the retail price. Tobacco products, energy drinks, and electronic smoking devices (including their liquids) continue to attract a 100% excise tax rate.
Strategic Compliance and Registration Deadlines
Registration must be completed within 30 days of a business opening or starting an activity involving excise goods. Failure to meet this timeline results in an automatic administrative penalty of AED 20,000. Once registered, businesses must file monthly excise tax returns and settle any due payments by the 15th day of the following month.
For businesses managing high volumes of stock, the 2026 sugar-based tiers require updated laboratory certificates from accredited facilities like the Ministry of Industry and Advanced Technology (MOIAT). If a business fails to provide a sugar content certificate, the FTA will automatically apply the highest tax tier by default. Proactive product classification is therefore essential to prevent overpayment and maintain healthy profit margins.
Transitional Relief and Claims
Businesses holding existing stock that was previously taxed at the old flat 50% rate—but now falls into a lower 2026 sugar tier—may be eligible for transitional relief. This allows for a deduction or refund on the difference between the old tax paid and the new lower liability, provided the stock remains unsold and properly documented. This “Health Check” of current inventory is a primary focus for tax consultancy services to ensure companies do not lose capital during the transition.