Excise TAX in UAE | Virtual Accountants

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Excise Tax in the UAE – What You Need to Know

Excise tax is an indirect tax levied on specific goods that are considered harmful to human health or the environment. In the UAE, excise tax currently applies to “excise goods” such as: 

  • Tobacco and tobacco products
  • Electronic smoking devices and tools
  • Liquids used in electronic smoking devices
  • Carbonated drinks (excluding plain sparkling water)
  • Energy drinks
  • Sweetened drinks (with added sugar or sweeteners)

The tax is usually due when excise goods are imported, produced, stockpiled, or released from a designated zone into free circulation in the UAE.

Excise tax affects pricing, profitability, supply chain and reporting. Having the right setup from day one is critical.

Who Must Comply with Excise Tax?
Businesses That Deal in Excise Goods

You may have excise tax obligations if your business:

  • Impoerts excise goods into the UAE
  • Produces or manufactures excise goods locally
  • Stockpiles excise goods for commercial purposes
  • Releases excise goods from a designated zone
  • Acts as a warehouse keeper or operates a facility storing excise goods on behalf of others 

This includes manufacturers, importers, distributors, wholesalers, retailers with large stocks, free zone entities and logistics players.

UAE Mainland and Free Zone/Designated Zone Businesses

Excise tax rules apply across the UAE, including free zones. For designated zones, special rules govern when excise tax becomes due (for example, upon release for local consumption). Getting these movements right is essential to avoid unexpected liabilities and penalties.

Why Excise Tax Compliance Matters
Financial and Legal Risks

Non-compliance with excise tax can lead to:

  • Backdated tax assessments
  • Fixed and percentage-based penalties
  • Restrictions at customs and on clearance of goods
  • Increased FTA scrutiny and audits

Given the relatively high excise tax reates (often 50% or 100% of the product price, depending on the goods), even small errors can create large exposures. 

Operational and Commercial Impact

Excise tax isn’t just a formality – it impacts:

  • Product pricing and profitability
  • Contract terms with suppliers and distributors
  • Supply chain design (especially use of designated zones)
  • Your ERP/accounting setup and inventory controls

Our role is to make sure your excise tax compliance is accurate, efficient, and commercially sensible.

Our Excise Tax Services in the UAE

We provide an end-to-end excise tax solution, from initial planning to ongoing compliance.

Excise Tax Advisory & Impact Assessment

We start by understanding your business model, product portfolio and supply chain, then:

  • Confirm whether your products are excise goods under FTA rules
  • Analyse your import, production and distribution flows
  • Identify where excise tax becomes due and who is responsible
  • Quantify the financial impact and help you plan pricing and contracts accordingly

Excise Goods Classification & Product Mapping

Correct product classification is the foundation of excise tax compliance. We:

  • Review product specifications, ingredients and marketing materials
  • Map each product to the relevant excise category
  • Help obtain and organise technical documentation (e.g., for sweetened drinks)
  • Create a product master file for use in ERP and reporting

Excise Tax Registration with the FTA

(Handled in detail on our Excise Tax Registration page)

On this main excise page, our role is to make sure that:

  • All entities and activities that must be registered are correctly identified
  • Registration is aligned with your corporate structure and operational setup
  • Your internal processes reflect FTA registration details from day one

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Excise Tax Return Preparation & Filing

(Detailed on our Excise Tax Return page)

At a high level, we support you to:

  • Compile data from customs, ERP and warehouse systems
  • Reconcile quantities, values and movements of excise goods
  • Prepare and review excise tax returns before submission
  • Assist with timely online filing and payment through FTA portals

Designated Zones & Warehouse Keeper Support

If you operate a warehouse or designated zone, we help you:

  • Understand obligations as a warehouse keeper
  • Set up inventory controls and movement records
  • Manage documentation for goods entering, moving within and leaving the zone
  • Prepare for FTA reviews and inspections

Excise Tax Health Checks & Audit Support

For businesses already registered, we offer:

  • Diagnostic reviews of your current excise processes
  • Sample testing of past returns, calculations and product classifications
  • Identification of exposure areas and opportunities for refunds/credits
  • Support during FTA enquiries, audits or disputes

Training & Internal Process Setup

We train your finance, tax, logistics and sales teams on:

  • Key excise tax concepts and rules
  • How to treat excise tax in day-to-day operations
  • Documentation and record-keeping best practices
  • Using checklists and SOPs to keep your business compliant

Why Choose Virtual Accountants LLC for Excise Tax? UAE Excise Tax Specialists

Our team focuses on UAE tax – VAT, Corporate Tax and Excise – giving you practical, up-to-date advice aligned with FTA guidance and real-world practice.

End-to-End, Practical Support

From initial scoping and registration to filings, reviews and audit support, we stay with you at every stage so you’re never left guessing what to do next.

Industry-Focused Approach

We work with:

  • Tobacco and vape distributors
  • FMCG and beverage companies
  • Importers and logistics providers
  • Retail chains and wholesale traders

This helps us design solutions that actually work in your industry, not just on paper.

Flexible, Technology-Driven Service

We’re set up to work virtually across the UAE, integrating with your existing accounting and ERP systems wherever possible, and keeping your processes as automated and efficient as they can be.

Our Typical Excise Tax Engagement Flow

  1. Discovery & Scoping
  • Understand your legal structure, activities and products
  • Confirm whether and where excise obligations arise
  • Agree on scope, timelines and deliverables
  1. Design & Implementation
  • Classify products and map supply chain flows
  • Support with registration, system setup and process documentation
  • Align your accounting/ERP to capture excise data correctly
  1. Ongoing Compliance & Support
  • Assist with periodic excise tax returns
  • Provide ad-hoc advisory on new products or business changes
  • Conduct periodic health checks to keep you aligned with new rules

Trusted Expertise in UAE Regulatory Compliance

We’re always on the same page with Government Agencies, working together to get the job done!

Accounting Software We Use

We’re always on the same page with Government Agencies, working together to get the job done!

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FAQs

Excise TAX Services in the UAE
Do we need to register for excise tax if we only import occasionally?

In some cases, even non-regular importers may not need to register, but excise tax may still be due. Each case must be reviewed based on FTA criteria and frequency of your transactions. 

Are free zone companies exempt from excise tax?

No. Free zone and designated zone entities can have excise tax obligations, particularly when goods are released for local consumption or moved out of the zone. The rules are specific and should be analysed carefully for each flow.

Can we claim refunds or adjust past excise tax?

In certain situations (e.g., exports, damaged goods, errors in past returns), adjustments or refunds may be possible, provided the correct evidence and process are followed.

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Our Locations

Office - Dubai

Office 609, 6th Floor, Al Moosa Tower 1, Trade Centre 1, Sheikh Zayed Road, Dubai, UAE

Office - Sharjah

Sharjah Media City (Shams), Al Messaned, Al Bataeh,   Sharjah, United Arab Emirates.