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Sugary drinks, e-cigarettes, to be subject to excise tax in UAE by 2020

The UAE Cabinet has announced that it will be expanding the products subject to excise tax, implementing the changes by 2020.

Sugary drinks will be taxed at 50% Electronic smoking devices will be taxed at 100% In 2017, excise tax was introduced, encompassing carbonated drinks, energy drinks, and tobacco

In an effort to put a curb on the consumption of unhealthy products, the Cabinet adopted a decision to expand the list of excise taxable products to include sweetened beverages, sugary drinks and electronic smoking devices, starting 1st January 2020.

According to a statement released by the Cabinet General Secretariat, and as reported by WAM, “The decision comes to support the UAE government’s efforts to enhance public health and prevent chronic diseases directly linked to sugar and tobacco consumption.”

“A tax of 50 percent will be levied on any product with added sugar or other sweeteners, whether in form of a beverage, liquid, concentrate, powders, extracts or any product that may be converted into a drink,” the statement added.

Manufacturers will be required to clearly identify the sugar content of their drinks in order for consumers to make sensible healthy choices.

“A tax of 100 percent will be also levied on electronic smoking devices, whether or not they contain nicotine or tobacco, as well as the liquids used in electronic smoking devices. The decision aims at reducing the consumption of harmful products that put the health of people and environment at risk,” the statement continued.

Incidentally, the UAE Cabinet’s announcement comes soon after a report surfaced this week by the US Center for Disease Control and Prevention (CDC), which has revealed alarming discoveries. 

Reuters reported this week: “The U.S. Centers for Disease Control and Prevention is investigating a “cluster” of lung illnesses that it believes may be linked to e-cigarette use after such cases were reported in 14 states.”

Another report also surfacing this week had similarly unsettling conclusions. 

In May of this year, Saudi Arabia also added sugary drinks and e-cigarettes to its excise tax program. 

Previously, starting in 2017, the UAE implemented excise tax to encompass carbonated drinks (50%), tobacco products (100%), energy drinks (100%).

According to the UAE government’s official site, “The UAE Government is levying excise tax to reduce consumption of unhealthy and harmful commodities while also raising revenues for the government that can be spent on beneficial public services.”

Indeed, excise tax’s purpose is two-fold: to encourage healthier lifestyles amongst UAE citizens, as well as provide a new stream of income for the government to continue diversifying its economy away from oil. 

Excise tax and VAT have so far played a major role in improving the country’s finances. According to the Khaleej Times, “initial estimates showed that the excise tax will generate up to around AED 7 billion ($1.9 billion) in annual revenues for the UAE federal budget.”