Sugary and soft drink shelf at a supermarket in Dubai. Image Credit: Ahmed Ramzan/Gulf News

Abu Dhabi: The Ministry of Finance announced details of Cabinet Resolution No.38 of 2017 on Wednesday, which sees sweetened, sugary drinks and electronic smoking devices and their liquids added to the list of products subject to excise tax.

Sweetened, sugary drinks will be subject to 50 per cent tax from January 1, while electronic smoking devices and their liquids will be 100 per cent taxed in the latest round of additions announced in a UAE Cabinet decision on Tuesday.

The decision was made for the good of public health and is in line with the UAE’s commitment to implement a GCC Unified Agreement for Excise Tax which will achieve economic integration across the region.

Obaid Humaid Al Tayer, Minister of State for Financial Affairs, said: “These amendments comes in line with the government’s orientation that excise tax policy targets consumption patterns harmful to public health, in order to complement efforts to raise awareness about the damaging effects of consumables harmful to health.

“It contributes to strengthening the health system’s work in controlling prevalent diseases and reducing the cost of treating them, promoting community health, motivating individuals to spend effectively, reducing the negative impact of harmful substances on the environment, and encouraging producers to develop better alternatives.”

Meanwhile, the Cabinet has also set a minimum standard price on tobacco products, of not less than 0.4 dirhams per roll of cigarettes, and 0.1 dirhams per gram of hookah tobacco, ready-to-use tobacco and similar products. The Minister of Finance will issue a decision on the implementation date, which is set to be before 1 January 2020.

Al Tayer added: “The Ministry of Finance conducted in-depth studies on the direct and indirect negative effects of health-harmful consumption patterns, including tobacco products, electronic tobacco and sugar-sweetened beverages. The cabinet decision aims to correct these harmful patterns and provide the appropriate legislation to regulate excise tax in order to achieve the government goals in ensuring the health and well-being of all members of the society and to achieve the third objective of the Sustainable Development Goals (SGDs) of ensuring healthy lives and promoting wellbeing for all at all ages.”

The Ministry of Finance has examined the economic and social impact of excise tax, since it was first launched in the UAE in 2017, and has seen a positive impact in reducing the consumption of the harmful goods included in the Cabinet decision. There has been little negative effect in terms of the loss to the gross domestic product or employment rates as a result of the taxation, thus keeping the state competitive.

Al Tayer, said: “The Ministry of Finance continues to work and coordinate with all relevant authorities to prepare periodic studies on excise tax and ensure its optimal application in the country. The ministry is also committed to strengthening the tax laws issued in the country, and to fulfill all its obligations towards all commercial treaties and agreements concluded, while continuing to work to develop its legal and legislative system to enhance the country’s position in various indicators of global competitiveness.”