UAE FTA publishes Cabinet Decision No. 52 of 2019

The United Arab Emirates (UAE) Federal Tax Authority (FTA) has recently published the Cabinet Decision No.52 of 2019 on Excise Goods, Excise Tax Rates and the Methods of Calculating the Excise price (Cabinet Decision)

The Cabinet Decision announced that Excise Tax will be levied on sweetened drinks, liquids used in electronic smoking devices and tools as well as electronic smoking devices and tools before 1 January 2020. The implementation date of this Cabinet Decision will be announced through another Cabinet Decision.

Who is this alert for?

Businesses which either manufacture, import, or have large amounts of the new Excise Goods stored or stockpiled in their premises in the UAE. This could include both registered and unregistered businesses.

Cabinet Decision No.52 of 2019 on Excise Goods, Excise Tax Rates and the Methods of Calculating the Excise price

This Cabinet Decision which will replace the previous Cabinet Decision No.38 of 2017 on Excise Goods, Excise Tax Rates and Methods of Calculating the Excise Price, expands the scope of Excisable Goods to include the following:

• Sweetened drinks;
• Liquids used in electronic smoking devices and tools; and
• Electronic smoking devices and tools

Excise Tax will be applicable at the rate of 50% of the higher of the price published by the FTA or the designated retail sales price less tax included on sweetened drinks. The Cabinet Decision relies on Standards issued by the GCC Standardization Organization (GSO) to determine whether or not the products would fall under the scope of Excise Tax for sweetened drinks.

Excise Tax will be applicable at the rate of 100% of the higher of the price published by the FTA or the designated retail sales prices less tax included on liquids used in electronic smoking devices and tools as well as the devices and tools themselves.

The Cabinet Decision further includes the following key points:

• Sweetened drinks will include any products which with added sugar (as determined under Standard 148 of the GSO) or other sweeteners (as determined under Standard 995 of the GSO), whether in form of a beverage, liquid, concentrate, powders, extracts or any product that may be converted into a drink.
• Beverages which contain at least 75% milk or milk substitutes, baby formula, baby food, beverages consumed for special dietary needs (as determined under Standard 654 of the GSO) as well as beverages consumed for medical uses (As determined under Standard 1366 of the GSO) will not fall under the scope of excise tax.
• Excise Tax will be applicable on liquids used in electronic smoking devices and tools regardless of whether the liquids contain nicotine or tobacco.
• This Cabinet Decision will not come into effect until a separate decision is issued to set a date of implementation as per Article 17 of this Cabinet Decision which states that the new rules could come into effect before 1 January 2020.