Cigarette, energy drink prices to double in the UAE

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Consumers of tobacco products, soft drinks and energy drinks will have to pay more in the UAE, following the announcement of a new excise tax by the Federal Tax Authority.

The planned Excise Tax will to go into effect from October 1, 2017, Khalid Al Bustani, Director-General of the Authority, announced at a press conference in Dubai on Wednesday.

The new tax will be imposed on carbonated drinks by 50 percent, and tobacco products by 100 percent and energy drinks by 100 percent.

Soft drinks include all carbonated/aerated beverages, with the exception of non-flavored carbonated water, as well as any concentrates, gels or extracts that can be processed into soft drinks. Energy drinks, meanwhile, include beverages that may contain stimulants or substances that induce mental or physical stimulation, including but not limited to: caffeine, taurine, ginseng and guarana, as well as any substances with similar effects.

ALSO READ: Saudi Arabia introduces new tax on tobacco, raise prices by 100 percent

The decision is in accordance with agreements by the Gulf Cooperation Council to raise the prices of those products, to be followed by a value-added tax (VAT) from the start of next year.

Saudi Arabia announced the increase of the prices of tobacco and its derivatives by 100 percent in June this year and has already started imposing the excise tax.

The FTA plans to release lists of new prices for products eligible for Excise Tax, which is calculated based on the retail market price.

The tax affects specific “Excise” goods that are produced in the UAE, imported into it or stockpiled in the Emirates, as well as excise goods released from a designated zone.

“Implementing Excise Tax in accordance with international best practices is the culmination of an extensive process,” Al Bustani said.

The FTA, he revealed, “worked with some of the world’s leading companies to develop a tax system that suits the UAE. The Excise Tax has been adopted to reduce the consumption of goods that damage people’s health.”

Awareness campaign

The Authority has launched a comprehensive awareness campaign, the FTA Director-General explained, organizing workshops for UAE-based companies to identify all tax procedures and mechanisms for registration and listen to their questions and comments regarding the tax system in general and Excise Tax in particular.

The FTA has also established a comprehensive electronic system to manage taxes in the UAE, which provides investors – be they public or private, individuals or institutions – with all the necessary requirements and services.

“The Authority seeks to provide a simple, seamless and intuitive tax system,” Al Bustani noted. “Therefore, we have opened the 24/7 registration process through the FTA website from Sunday, September 17, 2017. The website witnessed a huge turnout for registration and all 250 excisable businesses are projected to be registered by the end of September.”

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