Team shortlist02 Oct 2017 AT 09:37 AM

UAE Federal Tax Authority reveals 1,610 items subject to excise tax

Cost of tobacco and energy drinks have increased by 100 percent
Team shortlist02 Oct 2017 AT 09:37 AM
UAE Federal Tax Authority reveals 1,610 items subject to excise tax
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The UAE Federal Tax Authority has just announced that 1,610 items have become subject to excise tax.

The tax that came into effect yesterday, Sunday, October 1, has seen the price of tobacco and energy drinks increase by 100 percent. It has also resulted in the cost of fizzy drinks such as Coca Cola, Pepsi and Miranda increasing by 50 percent.

Of the 1,610 items taxed, 60 percent of them were classified as soft drinks, 26 percent were listed as tobacco and its byproducts such as shisha and finally, 14 percent were listed as energy drinks.

And, while some may be angered by the increase in price of said products, the Director General of the Federal Tax Authority, Khaled Al Bustani has announced that the UAE Excise Tax has been adopted to reduce the consumption of goods that damage people’s health.

According to a report by national news company, WAM the number of items on the list could increase in the future, if new brands of tobacco products, soft drinks or energy drinks are introduced.

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For all those who are new to the UAE, here’s what you need to about the UAE’s excise tax and the Value Added Tax (VAT) that will be introduced across the UAE in January of next year…  

Last week, the Federal Tax Authority announced that excise tax collections will only be accepted in e-Dirhams. A decision that is believed to boost the government’s efforts of adopting an electronic system, as well as aid it's mission of providing a high-level of security and efficiency in payments.

The UAE is the second Gulf country after Saudi Arabia to apply excise taxes.

The UAE tax authority expects government revenues to increase by as much as AED7 billion (US$1.9 billion) after the collection of excise tax.

With regards to VAT, the news of the 5 percent VAT was confirmed earlier this year by the Under Secretary of the UAE Ministry of Finance, Younis Al Khouri, who stated that from January 1, 2018, all GCC countries will be enforcing a 5 percent VAT across the broad.

While businesses with annual revenues of over AED375,000 will be obliged to register for the GCC VAT system, there will be no income tax on salaries.

The cost of preschool and school, as well as government owned or government funded higher education facilities will be unaffected by the introduction of VAT.

All goods exported out of the GCC will be zero rated, while investments in gold, silver and metals with 99 percent purity will also be subject to a zero VAT rate.

There’s also good news for residential property hunters as both rental and sales will be generally exempted from VAT.

With regards to transport, it seems that the price won’t be going up anytime soon. All local passenger transport such as taxis and metro services will be exempt, while international flights from the UAE as well as international air passenger transfers through the UAE will be zero rated.

In an attempt to help all UAE businesses adapt to the new law that will come into effect on January 1, 2018, the UAE’s Federal Tax Authority (FTA) has launched a new website, www.tax.gov.ae.

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