UAE Updates Excise Tax on Electronic Smoking Devices and Concentrates in 2025

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On January 3, 2025, the Minister of State for Financial Affairs issued Ministerial Decision No. 1 of 2025, effective immediately. This decision represents a modification to the application of Cabinet Decision No. 52 of 2019 about excise goods, tax rates, and methods for computing excise prices. For the benefit of stakeholders, including businesses and individuals, hereunder are the main points that characterize this decision.

Liquids Used in Electronic Smoking Devices and Tools

It determines the imposition of excise tax on all liquid used with any electronic smoking devices and related apparatus, both whether they carry nicotine or not. The categories for these articles are in the classification and code as per Chapter Twenty-Four, the GCC Common Schedule for Classification and Coding of Goods.

Key Changes and Clarifications:

Electronic Smoking Device Liquids: The decision clarifies that excise tax applied on liquids used in electronic smoking devices, whether containing nicotine or not, would be pegged according to the harmonized system codes provided for in Chapter Twenty-Four of the Gulf Cooperation Council’s Common Schedule for Classification and Coding of Goods.

Electronic Smoking Devices and Tools: Harmonized system codes from Chapter Eighty-Five of the GCC’s Common Schedule have been allocated to various electronic smoking devices and tools, such as:

  • Reusable electronic cigarette devices (85 43 40 10 00 00)
  • Electronic water pipe “shisha” (85 43 40 20 00 00)
  • Electrically heated devices for cigarettes (85 43 40 30 00 00)
  • Other electronic smoking devices (85 43 40 90 00 00)
  • Specific codes for parts, excluding batteries (85 43 90 91 00 00, 85 43 90 92 00 00, 85 43 90 93 00 00, 85 43 90 98 00 00)

Concentrates, powders, gel, and extracts: A further change relates to the excise price calculation of concentrates, powders, gels, and extracts used to prepare carbonated, energy, or sweetened beverages.

The standard price list published by the Authority, if applicable.

The Designated Selling Price to the retailer (declared by the importer or producer), before discounts and after deducting the included tax. This “Designated Selling Price” is clarified as the “Designated Retail Sales Price”.For concentrates, powders, gels, or extracts not included in the above, the excise price shall be determined in accordance with Clause (1) of Article (13) of Cabinet Decision No. 52 of 2019. Taxable persons shall keep records to support the “Designated Selling Price,” any deductions, and sales quantities.

Abrogation: The Nation hereby officially cancels Ministerial Decision No. 236 of 2019 with this new decision; all provisions that conflict with this decision are nullified.

Impact and Implications:

The Ministerial Decision provides a more precise and detailed description of excise tax imposition on electronic smoking products and concentrates of beverages.

For concentrates, powders, gels, or extracts not covered by the above, the excise price will be calculated according to Clause (1) of Article (13) of Cabinet Decision No. 52 of 2019. Taxable persons must maintain records to substantiate the “Designated Selling Price,” any deductions, and sales quantities.

Abrogation: Ministerial Decision No. 236 of 2019 is hereby officially revoked by this new decision. Any conflicting provisions are also nullified.

Impact and Implications:

The Ministerial Decision gives more precision and detail about how excise tax should be imposed on electronic smoking products and concentrates of beverages. The companies involved in importing, manufacturing, or trading these commodities in the UAE must be alert about the newly established harmonized system codes and the revised methodology of calculating excise prices on concentrates. For that, maintaining correct records of sales and prices would be vital.

This update represents the continued efforts of the UAE to regulate excise goods, increase revenue, and respond to public health issues. Businesses must consult professionals for proper compliance with the new rules.

Disclaimer: The information in this blog post is intended to inform readers only and is not legal or tax advice. Readers are advised to consult competent professionals for particular advice.

Unicorn Global Solutions will keep you posted on all the latest UAE tax updates, including the change for 2025 regarding excise tax on electronic smoking devices and concentrates. Their expertise ensures that you will be well guided through the most updated tax law to help your business stay in compliance. Our solution will help you manage this tax very effectively to save time and avoid penalties. Get in touch with us today for more personalized solutions related to UAE excise tax compliance. Text us on whatsApp  or call us today

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