UAE FTA publishes Cabinet Decision No. 55 of 2019

The United Arab Emirates (UAE) Federal Tax Authority (FTA) has published Cabinet Decision No. 55 of 2019 (the Decision) on the Excise Price for tobacco products.

Who is this alert for?

Businesses who are required to calculate and pay Excise Tax on Tobacco Products in the UAE.

Overview

The Decision sets out the Excise Price for Tobacco Products as follows:

• No less than AED 0.40 per cigarette; and
• No less than AED 0.10 per 1 gram of water pipe tobacco, or ready to use tobacco or other similar products.

It also provides the following definitions:

• Cigarettes – all normal and electrically-heated cigarettes.
• Water pipe tobacco – tobacco intended for smoking in a water pipe and which consists of a mixture of tobacco and glycerol, whether or not containing aromatic oils or extracts, molasses or sugar and whether or not flavoured with fruit.

As per Article 13 of the recently published Cabinet Decision No. 52 of 2019 (Deloitte alert here), the Excise Price used in calculating Excise Tax payable shall be the higher of:

• The price published by the FTA for the Excise Good in a standard price list (if available); or
• The designated retail sales price for the Excise Good, less the Tax included therein.

The Decision therefore sets the minimum Excise Price for the Tobacco Products listed. Where the designated retail sales price less the Tax included is lower, the Excise Price published in the Decision will apply.

The Decision indicates that the changes will come into effect before 1 January 2020, on a date to be specified in a future Decision issued by the Minister of Finance.