The UAE Cabinet has issued Cabinet Decision No. 99 of 2025, introducing targeted amendments to the Excise Tax framework established under Cabinet Decision No. 52 of 2019. These amendments refine the definitions and treatment of Excise Goods, enhance classification rules, and reinforce administrative procedures to support consistent application of the Excise Tax regime. The amendments are effective from 9 September 2025.

This legislative development is intended to provide additional clarity, ensure alignment with product developments in the marketplace, and support the regulatory objectives of the UAE’s Excise Tax system.

1. Scope of Excise Goods (Article 2)

The categories of Excise Goods subject to tax remain unchanged:

• Tobacco and tobacco products
• Liquids used in electronic smoking devices and tools
• Electronic smoking devices and tools
• Carbonated drinks
• Energy drinks
• Sweetened drinks

Tobacco and tobacco products are confirmed to include electrically heated cigarettes, thereby removing ambiguity concerning their tax treatment. These fall under Chapter 24 of the GCC Common Customs Tariff.

2. Exclusion for Smoking Cessation Products (Article 3(2))

A new exception has been introduced whereby certain products listed under Chapter 24 of the GCC Common Customs Tariff shall be excluded from Excise Tax, provided they are:

• Exclusively intended to assist with smoking cessation, and
• Classified under specific Customs codes to be defined by a Ministerial Decision.

This exception supports public health initiatives and aligns the Excise Tax framework with tobacco harm reduction strategies.

3. Treatment of Products Meeting Multiple Excise Definitions (Article 11)

Where a product simultaneously meets the definitions of more than one category of Excise Goods, the product shall be classified under the category subject to the highest applicable Excise Tax rate.

Illustrative Example:

A beverage qualifying as both a carbonated drink (50%) and a sweetened drink (50%) will continue to be classified as a carbonated drink for Excise Tax purposes.
This rule ensures consistent treatment and removes potential uncertainty in classification disputes.

4. Excise Tax Rates (Article 12)

No changes have been made to the applicable Excise Tax rates:
 

Excise Good	Tax Rate
Tobacco and tobacco products	100%
Liquids used in electronic smoking devices	100%
Electronic smoking devices and tools	100%
Carbonated drinks	50%
Energy drinks	100%
Sweetened drinks	50%

           
5. Excise Price Determination and Method of Calculation (Article 13)

The Excise Price is to be calculated as the higher of the following:

• The price published by the Federal Tax Authority in its standard price list, where available; or
• The designated retail sales price, excluding VAT.

For purposes of deduction of the VAT-inclusive retail price:

• For goods taxed at 50%, the Excise Tax shall be deemed to be one-third of the designated retail price.
• For goods taxed at 100%, the Excise Tax shall be deemed to be half of the designated retail price.

Special Rule (Article 13(3)):

For concentrates, powders, gels, or extracts, the Excise Price shall be determined in accordance with a separate mechanism to be issued by the Minister. Businesses dealing in upstream beverage or tobacco products should monitor developments on this point. You can read our update on the Public clarification issued by the FTA on this here.

6. FTA Oversight and Administrative Procedures (Article 15)

The Federal Tax Authority (FTA) is granted further authority to:

• Require documentation, laboratory tests, or other evidence to verify product classification; and
• Treat a product as an Excise Good by default if the taxpayer fails to submit the required evidence within the specified time frame.

These provisions reinforce the compliance and enforcement mechanisms available to the FTA and support accurate tax application.

BDO UAE Insights

The amendments introduced by Cabinet Decision No. 99 of 2025 provide clarity to taxpayers and reinforce the UAE’s commitment to aligning its Excise Tax regime with international practices and public health objectives.

The explicit classification of heat-not-burn products, the targeted exemption for cessation aids, and the strengthened compliance framework all represent important developments for the relevant businesses.

Taxable persons should take proactive steps to ensure that their products are accurately classified, appropriately priced, and fully documented in line with these amendments.

We recommend that businesses:

• Reassess the classification of products, especially those falling under Chapter 24 of the GCC Customs Tariff.
• Review pricing models to ensure alignment with the updated Excise Price determination method.
• Prepare appropriate technical documentation and product specifications to support classification, exemption eligibility, and pricing declarations.
• Monitor forthcoming Ministerial Decisions and FTA guidance on sugar-based Excise regimes and treatment of concentrates.

For further information or tailored advice, please contact our Indirect Tax specialists at BDO UAE.