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Tax Gap of Heated Tobacco Products in the United Arab Emirates

The government of the United Arab Emirates (UAE) implemented the Excise Tax Law in the last quarter of 2017. The excise rates for all tobacco products were set at 100% of the “excise price.” The law was amended in 2019 (Cabinet decision No 52 of 2019) to include heated tobacco, e-liquids used with electronic cigarettes or electronic devices, and tools used for electronic cigarettes and heated tobacco devices. The rate is the same for all tobacco or nicotine products and electronic devices. Therefore, both heated tobacco and devices are taxed at 100% of the “excise price.” In addition, all tobacco and nicotine products, and taxable devices and tools, require a digital tax stamp. The decision came into effect starting January 1, 2020. 

The Cabinet Decision states the methods for calculating the excise price (Art 13 of the Cabinet decision, and Art 3 or the Decree Law). The excise price should be the higher of (i) the price published by the Authority for Excise Products in a “standard price” list, or (ii) the designated retail price for the good, minus the excise tax included therein. The Decision also states that “for excisable goods taxable at a rate of 100% of the excise price, the tax shall be equivalent to half of its designated retail price.” The designated retail price shall be the retail sales price minus the VAT (Art 14).

The tax is in accordance with the “Excise Tax Agreement of the States of the Gulf Cooperation Council.”

Our methodology to calculate the “designated retail price”, the “excise price”, and the applicable tax rate is described on the tax maps’ Methodology page.

Sources

Last Updated Feb. 25, 2021