Excise Tax Registration in the UAE
The Excise tax came into effect in the UAE in 2017 to promote a healthier lifestyle and increase government revenue. This tax is considered an indirect tax levied on certain products which are considered harmful for human health also the environment. If you need to understand who needs to register for Excise tax, and when it is essential to register/ stay compliant with UAE tax laws.
In this blog, we will explain the process of excise tax registration, the entities that need to register, the deadlines, and the impact of non-compliance.
1. What is the Excise Tax and its tax rates in the UAE?
Excise tax charges are as follows:
- Tobacco and tobacco products - 100% (from 1 October 2017)
- Liquids used in electronic smoking devices and tools - 100% (from the date to be determined by the Minister
- Electronic smoking devices and tools - 100% (from the date to be determined by the Minister)
- Carbonated drinks - 50% (from 1 October 2017)
- Energy drinks - 100% (from 1 October 2017)
- Sweetened drinks - 50% (from the date to be determined by the Minister)
Even though the tax is an indirect tax, the producer or importer has to pay it to the authority and eventually passed on to consumers along with the retail selling price.
2. When to Register for Excise Tax?
As per the Federal Tax Authority (FTA), if you are involved in any of the activities related to excise goods must register for excise tax.
a). Importing Excise Goods
Any business that brings excise goods to UAE means imports taxable goods into the UAE must register, regardless of the quantity.
b). Producing Excise Goods
If any company manufactures or produces goods that fall under the excise product category within the UAE for any commercial purposes, is required to register.
c). Stockpiling Excise Goods
If you stock excise goods in large quantities for commercial sale, regardless of how frequently you trade, registration is mandatory, i.e., any retailer who stores a large quantity of energy drinks for a large event may fall under this requirement if the goods are not taxed earlier.
d). Operating a Tax Warehouse
If you run a designated excise warehouse (authorised by the FTA), you must register as a Warehouse Keeper and/or Tax Warehouse Operator.
3. Who is not required to register?
Registration of excise tax is not required if:
- You are exclusively an end user for the excise goods
- You sell excise goods at retail, but the goods were already taxed (and you're not stockpiling or importing)
- You are a logistics or transport company not involved in owning the excise goods
4. Any particular threshold to register for Excise Tax?
There is no threshold (unlike VAT) for Excise Tax registration; one taxable transaction requires registration. Registration should be completed before:
- You import, produce, or stockpile excise goods
- You start operating a designated tax warehouse
Failing to register before conducting taxable activities may result in penalties and backdated tax liabilities.
5. Required documents for Registration
For Excise Tax registration through the FTA's e-Services portal, you require:
- Trade License copy
- Passport, Emirates ID of owner(s)/manager
- Contact details (email, mobile)
- Bank account (IBAN)
- Customs code and location if importing
- Nature of excise activities (with product list)
- Warehouse details, if applicable
For Warehouse Keeper/Tax Warehouse registration, additional documents may be required, such as
- warehouse floor plans
- lease agreements
- security plans
6. Regarding the return filing and the timeline for payment
The excise tax return has to be filed every month via the FTA portal post registration. Any activity conducted related to excise goods in April 2025, the returns filing and payments have to be submitted on or before 15th May 2025, which means every month before 15th the filing and payment have to be made.
7. Details on penalties for Non-Compliance
Failing to register or comply with Excise Tax obligations can lead to hefty penalties:
The penalties of excise tax will come into play if not registered and then if not complied.
- Failure to register excise tax - AED 10,000
- Late filing of excise tax return - AED 1000 (first offence), AED 2000 if repeated.
- Late payment of Excise tax will be 2% of the unpaid tax, and after 7 days, it will be 4% of the unpaid tax.
- Incorrect excise return - for the first time it will be AED 3000, and if repeated, it will be AED 5000
If there is any severe violation of excise tax found by the FTA, then the authority can conduct audits, impose back-dated taxes and also have the ability to suspend your business
8. What are the Common Mistakes to Avoid
During the registration of excise tax, the common errors that businesses may make
- Delay in the registration, thinking "I have a small business, so not required to register."
- Classification of incorrect product - eg, assuming that sweetened beverages are not considered as excise goods
- People imagine that there will be no excise tax if items are bought locally, because it might be taxed already
- You may fail to register a tax warehouse when storing bulk excise goods
9. How can we support you
We at Flying Colour Tax Consultant LLC support businesses with:
- Registration of excise tax and assistance
- Product classification and eligibility checks
- Monthly return filing assistance
- Forming a Tax Warehouse with FTA sanctions
- Audit preparation and compliance assessments
Our major motive is to support your business to remain compliant as per tax laws, so that unnecessary penalties can be avoided while you focus on the growth of your organisation.
10. Conclusion
The registration of excise tax in UAE is mandatory for any businesses involved in the manufacturing or production, import or stocking of goods like energy drinks, tobacco products and sweetened beverages. The registration is not based on any threshold; it's purely based on transaction, meaning a single transaction means the registration is mandatory.
For clarity, whether you need to register or to know how to get started, it's advisable to consult a qualified tax advisor as soon as possible.
Need Help With Excise Tax Registration?
As Flying Colour Tax Consultant LLC can cut short the journey of tax compliance. Reach out to us for expert assistance in regards to excise tax, corporate tax and value-added tax in the UAE.
To learn more about Excise Tax Registration in the UAE: Who Needs to Register and When?, book a free consultation with one of the Flyingcolour team advisors.
Disclaimer: The information provided in this blog is based on our understanding of current tax laws and regulations. It is intended for general informational purposes only and does not constitute professional tax advice, consultation, or representation. The author and publisher are not responsible for any errors or omissions, or for any actions taken based on the information contained in this blog.