Tax increase on tobacco and energy drinks

Off-the-shelf prices likely to rise after 100 percent tax hike

As part of the pending arrival of value added tax (VAT) in Dubai, the UAE Federal Tax Authority (FTA) has moved to impose excise tax of 100 percent on all tobacco products and energy drinks in the UAE.

The move comes as the FTA prepares for the final implementation of laws surrounding VAT, in a statement issued by His Highness Sheikh Hamdan Bin Rashid Al Maktoum, Deputy Ruler of Dubai and Minister of Finance.

As a result, tobacco products and energy drinks will likely see a noticeable rise in price. While the customer doesn’t necessarily directly pay for the increased tax measures on products, merchants can include the cost of tax into the prices displayed on the shelves. Soft drinks will also see a 50 percent increase in excise tax.

Tax increases on tobacco, energy drinks and soft drinks will take effect as of the fourth quarter of 2017, looking towards the arrival of VAT on Monday January 1 2018.

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