Abu Dhabi: The Federal Tax Authority (FTA) on Saturday clarified what qualifies as sweetened drinks and electronic smoking devices that will incur an excise tax when a Cabinet decision on excise goods is implemented from January 1 next year.
In a statement issued to the press, the FTA said the decision is part of the government’s continuous efforts to promote healthy lifestyles in the UAE community and curb the spread of diseases stemming from consumption of harmful goods.
FTA director-general Khalid Ali Al Bustani said the authority has launched a widespread awareness campaign through workshops and seminars targeting all stakeholders involved to introduce them to the new procedures.
What is a sweetened drink?
The Cabinet decision identifies sweetened drinks as any product to which a source of sugar or sweetener is added.
These could be produced as one of the following:
- - Ready-to-drink beverage, or
- - Concentrates
- - Gels
- - Powders
- - Extracts, or any other form that can be converted into a sweetened drink.
In that regard, sugar includes any type of sugar determined under Standard 148 of the GCC Standardisation Organisation and any subsequent relevant standards.
Meanwhile, sweeteners include any type of sweeteners determined under Standard 995 of the GCC Standardisation Organisation and any subsequent relevant standards.
What about exempt beverages?
The decision also outlines beverages that are not included in the new tax, namely:
- Ready-to-drink beverages containing at least 75 per cent milk
- Ready-to-drink beverages containing at least 75 per cent milk substitutes
- Baby formula or baby food
- Beverages consumed for special dietary needs, as determined under Standard 654 of the GCC Standardisation Organisation under the heading “General Requirements for Pre-packaged Foods for Special Dietary Use” and any subsequent and relevant standards; and finally,
- Beverages consumed for medical use, as determined under Standard 1366 of the GCC Standardisation Organisation under the heading “General Requirements for Handling of Foods for Special Medical Purposes’, and any subsequent and relevant standards.
On a side note, the authority clarified that as per the decision e-liquids include all liquids used in electronic smoking devices and tools and the like, whether or not containing nicotine or tobacco.
E-cigarettes refer to all electronic smoking devices and tools and the like, whether or not they contain nicotine or tobacco.
Registration process begins
FTA has revealed that it has updated the electronic registration system for excise goods to allow for adding the new products included in the amended Cabinet Decision.
FTA director-general Khalid Ali Al Bustani called on producers, importers, and stockpilers of sweetened drinks with added sugar to abide by the decision and start registering for excise tax purposes. Excise tax is an indirect tax that is imposed on certain products deemed harmful in an effort to curb their consumption.
An entirely new registration procedure was put in place on August 18, and the FTA called on all concerned businesses, including producers, importers, and stockpilers of Excise Goods, to take the initiative and register said goods in the new system.
It also called on all businesses dealing with sweetened drinks to go ahead and register for excise tax purposes and register their products within FTA’s new system as part of the first phase of registration, where the authority will announce the next phase of the registration that will include electronic smoking devices, and liquids used in the devices.
As per the decision, FTA specifies the necessary procedures to classify excise goods, and may request persons to provide documents or laboratory evidence to determine the content of a certain product and properly classify it.
Al Bustani said FTA has set a comprehensive plan to implement the new decision which includes, in addition to the updates made to registration systems, several manuals and guides clarifying the standards and procedures for implementing excise tax on sweetened drinks, electronic smoking devices and liquids.
The guides break down the steps needed to carry out the registration both for taxable persons and excise goods as well as the timeline and deadlines.
“Implementation of 50 per cent excise tax on carbonated drinks and 100 per cent on energy drinks and tobacco products was a great success by all measures and indicators,” Al Bustani added.