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# UAE Federal Tax Authority Excise Tax: Electronic Smoking Devices and Energy Drinks

The UAE's 100% excise tax on electronic smoking devices and vaping liquids is one of the highest in the world — and the compliance obligations that come with it are enforced hard at the border. Importers and distributors who haven't structured their FTA registration, import declarations, and monthly returns correctly find out quickly. Here's how the regime works and what you need to have in place.

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At a glance

Excise rate (ESD)

100% of retail price

Legislation

Federal Decree-Law No. 7 of 2017

Applicable from

1 December 2019 (ESD extension)

Regulator

Federal Tax Authority (FTA)

## Key concepts: UAE excise tax on electronic smoking devices

### UAE Excise Tax Law — Federal Decree-Law No. 7 of 2017 and the 2019 Extension

The UAE introduced excise tax under Federal Decree-Law No. 7 of 2017 on Excise Tax, initially targeting tobacco products and carbonated and energy drinks. Cabinet Decision No. 52 of 2019 significantly expanded the scope by adding electronic smoking devices and the liquids used in them to the list of excisable goods — effective 1 December 2019. This was accompanied by Cabinet Decision No. 55 of 2019, which set the standard price methodology for calculating excise tax on goods without a clearly defined retail selling price. For importers and manufacturers of vaping products, e-cigarettes, and heated tobacco devices, the 2019 expansion created immediate registration, declaration, and payment obligations with the Federal Tax Authority (FTA).

### Excise Tax Rates — What You Are Liable For

The UAE excise tax rates are applied to the higher of the retail selling price or the FTA standard price. The applicable rates are: tobacco products (cigarettes, cigars, waterpipe tobacco, chewing tobacco) — 100%; electronic smoking devices and tools (e-cigarettes, vaping devices, heated tobacco devices) — 100% from 1 December 2019; liquids used in electronic smoking devices (e-liquids, nic salts, vaping liquids, whether or not containing nicotine) — 100%; energy drinks (beverages containing stimulants, vitamins, herbs, or amino acids marketed for energy) — 100%; carbonated beverages (including flavoured sparkling water) — 50%. These rates are among the highest in the GCC and directly affect product pricing, distribution economics, and retail margin planning.

### Definition of Electronic Smoking Device Under UAE Law

Cabinet Decision No. 52 of 2019 defines 'electronic smoking devices and tools' broadly — encompassing e-cigarettes, vaping devices, pod systems, heated tobacco devices (such as IQOS), and any accessory designed to be used as part of the smoking process through such a device. This includes rechargeable batteries marketed specifically for vaping use, atomisers, tanks, and pod cartridges sold as standalone products. The definition of 'liquids used in electronic smoking devices' covers all e-liquids and refill substances, whether nicotine-containing or nicotine-free, flavoured or unflavoured — a fact that catches some importers of zero-nicotine vaping liquids off guard. If it's designed for use in a vaping device, it's excisable.

### FTA Registration — Mandatory Before First Import or Production

Any business that imports, produces, or stockpiles excisable goods in the UAE mainland must register with the Federal Tax Authority (FTA) as an Excise Tax registrant before commencing those activities. Registration is completed through the FTA's EmaraTax portal (emaratax.gov.ae). The registration threshold for excise tax is zero — there is no minimum turnover below which registration is optional. Registration must be completed at least 30 days before the first taxable activity. Importers should note that customs clearance for electronic smoking devices on the UAE mainland requires an FTA excise registration number at the point of entry — unregistered importers will face Customs holds.

### Designated Zones and Free Zones — Excise Tax Implications

The UAE maintains a concept of 'Designated Zones' — certain free zones that are treated as being outside the UAE VAT and excise territory for the purposes of these taxes. Goods stored in a Designated Zone are not subject to excise tax as long as they remain within that zone. However, the movement of excisable goods from a Designated Zone to the UAE mainland triggers an excise tax liability at that point — the person responsible for the movement becomes the taxable person. This has significant implications for free zone distributors who use UAE free zones as regional distribution hubs: every transfer of electronic smoking devices from the free zone to mainland UAE customers creates an excise tax event that must be declared and paid.

### Import Declaration Obligations — EmaraTax and Customs Integration

Electronic smoking devices and vaping liquids imported into the UAE mainland must be declared to the FTA through the EmaraTax platform in addition to standard customs procedures. The import declaration process involves: confirming the excise registration number at import, declaring the quantity and value of excisable goods being imported, calculating and paying the excise tax liability before or at the point of customs clearance, and obtaining FTA confirmation for customs release. The FTA and UAE Customs Authority (Federal Customs Authority) systems are integrated — a missing or incorrect FTA declaration will block Customs clearance. Digital Tax Stamps, which are track-and-trace labels mandated for tobacco and increasingly being phased in for electronic smoking devices, must also be applied before goods enter the mainland.

## FTA excise tax compliance process for importers

01

Determine whether your product falls within the UAE excise tax scope — electronic smoking devices, e-liquids and vaping liquids (including zero-nicotine), heated tobacco devices, energy drinks, and carbonated beverages are all excisable; review the definitions in Cabinet Decision No. 52 of 2019 carefully for borderline products.

02

Register as an excise goods importer or producer on the FTA's EmaraTax portal at emaratax.gov.ae — registration must be completed at least 30 days before the first taxable activity; have your trade licence, Emirates ID or passport details, and banking details ready for the application.

03

Identify the retail selling price or FTA standard price for your excisable products — the FTA publishes standard price lists for excise goods where a retail price is not clearly defined, and excise tax is calculated on the higher of the two; review the FTA's published standard price schedules for your product categories.

04

Confirm Digital Tax Stamp requirements for your products — tobacco products are already subject to mandatory Digital Tax Stamps under the Federal Tax Authority's track-and-trace programme, and DTS requirements are extending to electronic smoking devices; check the FTA's current DTS scope and timeline for your product category.

05

File monthly excise tax returns through EmaraTax — returns are due by the 15th day of the month following the taxable period; include all import declarations, production declarations, and adjustments for returned or destroyed goods in the return.

06

Maintain comprehensive stock records and goods movement records for all excisable goods — the FTA requires businesses to maintain records enabling the tracing of each excisable product from import or production through to retail sale or export, and audit exposure is significant for excise goods businesses.

07

For free zone storage and distribution operations, document all movements of excisable goods from Designated Zones to the UAE mainland meticulously — each movement is a separate taxable event that must be declared to the FTA before the movement occurs or at the point of transfer.

08

Conduct an annual review of the FTA's published standard price lists and excise tax scope — Cabinet Decisions can expand the list of excisable goods, and standard prices are reviewed periodically; your compliance programme must reflect current rates and scope rather than relying on historic assumptions.

## Frequently asked questions

### What is the excise tax rate on electronic smoking devices in the UAE?

The UAE excise tax rate on electronic smoking devices and tools — including e-cigarettes, vaping devices, pod systems, and heated tobacco devices — is 100% of the retail selling price or the FTA standard price, whichever is higher. The same 100% rate applies to liquids used in electronic smoking devices, covering all e-liquids and vaping substances regardless of nicotine content. This rate applies from 1 December 2019, the effective date of Cabinet Decision No. 52 of 2019 that added electronic smoking devices to the UAE excise tax regime.

### When must I register for UAE excise tax?

You must register with the Federal Tax Authority (FTA) for excise tax at least 30 days before you carry out any taxable activity — importing, producing, or stockpiling excisable goods in the UAE mainland. There is no registration threshold: the obligation applies from the first transaction regardless of volume or turnover. Registration is completed through the FTA's EmaraTax portal. If you are importing electronic smoking devices or vaping liquids into the UAE mainland without an active FTA excise registration, Customs will hold your goods at the port of entry.

### Are vaping products subject to UAE excise tax?

Yes. All vaping products are subject to UAE excise tax at 100%. This covers e-cigarettes, pod systems, disposable vaping devices, and any device designed for inhalation of vapour. It also covers all e-liquids and vaping substances used in these devices — including zero-nicotine liquids, salt nicotine liquids, and flavoured bases — as Cabinet Decision No. 52 of 2019 defines 'liquids used in electronic smoking devices' without reference to nicotine content. Accessories specifically designed for use in vaping devices (such as replacement atomisers and pod cartridges) are also within scope under the definition of 'electronic smoking devices and tools'.

### Do free zone companies pay UAE excise tax on electronic smoking devices?

Businesses operating in UAE Designated Zones (certain free zones recognised under the excise tax framework) do not pay excise tax on goods stored within the Designated Zone — the zone is treated as outside UAE excise territory. However, when excisable goods move from a Designated Zone to the UAE mainland, excise tax is triggered at that point. The person responsible for the movement — typically the free zone distributor or their mainland customer — must declare the movement to the FTA and pay the excise tax before or at the point of transfer. Free zone companies that sell only to export markets outside the UAE can avoid UAE excise tax liability, but any supply to mainland UAE customers creates an excise event.

**Disclaimer:** Educational resource only. Regulatory requirements change. Consult a qualified compliance specialist before making decisions.

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