UAE excise tax on tobacco, tobacco products, electronic smoking devices and tools, and liquids used in electronic smoking devices is set at 100% of the Excise Price under Cabinet Decision No. 197 of 2025 (effective 1 January 2026), which replaced Cabinet Decision No. 52 of 2019. This rate applies to all three categories of tobacco-related excise goods. Abdelhamid & Co (FTA TAAN 20033908) provides compliance support for importers, producers, and distributors subject to excise tax on these goods.
Legal Framework — Cabinet Decision No. 197 of 2025
Cabinet Decision No. 197 of 2025 was issued on 27 November 2025 and became effective on 1 January 2026. It supersedes Cabinet Decision No. 52 of 2019 entirely. The Decision was issued under Federal Decree-Law No. 7 of 2017 on Excise Tax (as amended) and Federal Decree No. 32 of 2017 ratifying the Common Excise Tax Agreement of the GCC States. The Federal Tax Authority administers all excise tax obligations under the Decree-Law and this Decision.
The Decision defines five categories of excise goods subject to tax: tobacco and tobacco products, liquids used in electronic smoking devices and tools, electronic smoking devices and tools, energy drinks, and sweetened drinks. The first three categories — all tobacco-related — are each subject to a 100% tax rate on the Excise Price.
Tobacco and Tobacco Products — Definition and Scope
Under Article 3 of Cabinet Decision No. 197 of 2025, tobacco and tobacco products include all items listed within Chapter 24 of the GCC Common Customs Tariff that are imported, cultivated, or produced in the UAE, including electrically-heated cigarettes. This is a broad definition encompassing cigarettes, cigars, pipe tobacco, shisha/water pipe tobacco, chewing tobacco, snuff, and all related products classified under Chapter 24.
An important exception: products listed within Chapter 24 that are exclusively intended to assist in smoking cessation are excluded from the definition of tobacco and tobacco products. Ministerial Decision No. 249 of 2025 (effective 1 October 2025) specifies the customs codes for smoking cessation products, which include nicotine chewing gum (HS 2404 91 10), nicotine tablets (HS 2404 91 20), nicotine patches (HS 2404 92 10), nicotine sprays (HS 2404 99 10), and nicotine injections (HS 2404 99 30). These products are explicitly excluded from excise tax.
Electronic Smoking Devices and Liquids — Scope
Articles 4 and 5 of Cabinet Decision No. 197 of 2025 cover the two remaining tobacco-related excise categories. Liquids used in electronic smoking devices and tools include all liquids — whether or not containing nicotine — used in vaping devices, e-cigarettes, and similar products. Electronic smoking devices and tools include all electronic smoking devices and tools — whether or not containing nicotine or tobacco — such as e-cigarettes, vapes, heat-not-burn devices, and similar products. Both categories are subject to 100% excise tax.
The specific customs codes for liquids and devices are to be specified by a separate Ministerial Decision. Importers and producers should confirm the applicable customs classifications before filing excise returns to ensure correct categorisation.
The 100% Tax Rate — How Excise Price is Calculated
Under Article 11 of Cabinet Decision No. 197 of 2025, the Excise Price is the higher of: the price published by the FTA in a standard price list (if available), or the designated retail sales price for the goods less the tax included in that price. For goods taxable at 100% of the Excise Price, the tax is equivalent to half of the designated retail sales price — i.e., the excise tax is half the retail price, and the excise price (exclusive of tax) is the other half.
| Calculation element | Formula |
|---|---|
| Excise Price (tax-exclusive) | Higher of: FTA published price OR (Retail Price ÷ 2) |
| Excise Tax at 100% | Excise Price × 100% = Excise Price |
| Retail Price (tax-inclusive) | Excise Price × 2 = Retail Price |
| Designated retail sales price | Higher of: declared/affixed producer/importer price (ex-VAT) OR average market retail price (ex-VAT) |
Price Display Obligation and Marking
Under Article 11 of the Decree-Law, the advertised price of excise goods when sold must be inclusive of excise tax. The penalty for failure to display prices inclusive of tax is AED 5,000. In addition, Article 24(2) of the Decree-Law authorises the Cabinet to specify, at the suggestion of the Minister, which excise goods must bear marks indicating that tax has been paid. Tobacco products have been subject to marking requirements (tax stamps/fiscal marks) since the original implementation of the excise tax regime in 2017.
Smoking Cessation Products — Excise Tax Exception
Ministerial Decision No. 249 of 2025 provides a clear exclusion for smoking cessation products from excise tax. This is significant for pharmacies, healthcare distributors, and importers of nicotine replacement therapy (NRT) products. The exclusion applies only to products that are exclusively intended to assist in smoking cessation — products with dual uses or that contain stimulant substances not related to cessation remain subject to excise tax if they fall within the scope of Chapter 24 or the electronic devices categories.
Why Choose Abdelhamid & Co for Tobacco Excise Tax Compliance
Our team has managed excise tax compliance for tobacco importers and distributors since 2017. We provide customs code classification analysis, Excise Price calculations, monthly return preparation, and audit representation. For disputes with the FTA on product classification or Excise Price determination, we provide forensic audit reports and reconsideration request submissions.
Frequently Asked Questions
What is the UAE excise tax rate on tobacco and cigarettes in 2026?
The UAE excise tax rate on tobacco and tobacco products is 100% of the Excise Price under Article 10 of Cabinet Decision No. 197 of 2025 (effective 1 January 2026). This rate applies to all items in Chapter 24 of the GCC Common Customs Tariff imported, cultivated, or produced in the UAE, including electrically-heated cigarettes.
Is vaping/e-cigarette liquid subject to UAE excise tax in 2026?
Yes. Under Article 4 of Cabinet Decision No. 197 of 2025, all liquids used in electronic smoking devices and tools are subject to 100% excise tax, regardless of whether they contain nicotine. The specific customs codes are to be specified by Ministerial Decision.
Are nicotine patches and smoking cessation products subject to UAE excise tax?
No. Under Article 3(2) of Cabinet Decision No. 197 of 2025 and Ministerial Decision No. 249 of 2025 (effective 1 October 2025), products exclusively intended to assist in smoking cessation — including nicotine patches, gum, tablets, sprays, and injections with specific HS codes — are explicitly excluded from the definition of tobacco and tobacco products for excise tax purposes.
How is the Excise Price calculated for tobacco products in the UAE?
Under Article 11 of Cabinet Decision No. 197 of 2025, the Excise Price is the higher of the FTA's published standard price list price (if available) or the designated retail sales price less the tax included therein. For goods taxable at 100%, the tax equals half the retail price, so the Excise Price equals half the retail selling price (ex-VAT).
What are electrically-heated cigarettes (HNB) classified as for UAE excise tax?
Electrically-heated cigarettes (heat-not-burn products) are explicitly included within the definition of "tobacco and tobacco products" under Article 3(1) of Cabinet Decision No. 197 of 2025 and are therefore subject to 100% excise tax. Separately, the electronic devices used to heat them may also fall within the "electronic smoking devices and tools" category, potentially creating dual exposure that requires careful product classification analysis.
Related Services
- Excise Tax Return Filing — monthly returns for tobacco and electronic device importers
- Excise Tax Registration — registration for new tobacco and vaping product importers
- Compliance Review — review Excise Price calculations and return accuracy
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