On January 3, 2025, the Ministry of Finance issued Ministerial Decision No. 1 of 2025, which gives crucial updates to the implementation of UAE excise tax 2025 guidelines within the United Arab Emirates (UAE). This decision follows a comprehensive review of numerous legal guidelines and former guidelines, consisting of the Federal Decree-Law No. 7 of 2017 on Excise Tax, the Cabinet Decision No. 52 of 2019, and the Ministerial Decision No. 236 of 2019. The new decision introduces essential changes associated with the excise tax on UAE goods like electronic smoking devices, liquids utilized in such devices, and positive consumables like concentrates, powders, and gel merchandise.
This blog will delve into the number one updates added through Ministerial Decision No. 1 of 2025, mainly its software to electronic smoking merchandise, excise pricing for items like concentrates, and the revocation of in-advance guidelines.
Excise Tax on Liquids for Electronic Smoking Devices
One of the valuable focuses of Ministerial Decision No. 1 of 2025 is the excise tax in UAE 2025 on liquids utilized in electronic smoking devices. The decision clarifies that whether or not the liquid incorporates nicotine, excise tax might be imposed on such items. To make certain of uniformity in category, the decision mandates the usage of harmonized gadget (HS) codes as laid out in Chapter Twenty-Four of the Common Schedule for Classification and Coding of Goods for Gulf Cooperation Council (GCC) countries.
The regulation ensures that excise tax applies to all liquids designed to be used in electronic smoking devices. These devices and liquids have come to be an increasing number of famous within the UAE and worldwide, and their law beneath excise tax targets to standardize pricing, manipulate consumption, and make certain public fitness targets are met. By aligning the category gadget with the wider GCC framework, the UAE simplifies the method for corporations uploading and exporting those items throughout the region.
Excise Tax on Electronic Smoking Devices and Tools
The excise tax implementation UAE covers a variety of electronic smoking devices and tools, which incorporates electronic cigarettes, electronic water pipes (shisha), and electrically heated devices for conventional cigarettes. It specifies the HS codes that apply to numerous devices beneath Chapter Eighty-Five of the Common Schedule for GCC countries.
Here are the important thing classes and their corresponding HS codes:
| Harmonized System Code | Item |
| 85 43 40 10 00 00
| Electronic cigarette devices for reusable use
|
| 85 43 40 20 00 00 | Electronic water pipes (shisha)
|
| 85 43 40 30 00 00
| Electrically heated devices for cigarettes |
| 85 43 40 90 00 00
| Other electronic smoking devices |
| 85 43 90 91 00 00
| Electronic cigarette components (excluding batteries) |
| 85 43 90 92 00 00 | Components for electronic water pipes (excluding batteries) |
| 85 43 90 93 00 00 | Components for electrically heated devices (excluding batteries) |
By specifying those HS codes, the decision gives corporations clean recommendations on which merchandise is problematic for excise tax. It additionally guarantees a steady tax remedy of electronic smoking merchandise, which aligns with broader worldwide standards.
Excise Pricing for Concentrates, Powders, Gels, and Extracts
Another enormous replacement added through Ministerial Decision No. 1 of 2025 is the law of excise pricing for goods like concentrates, powders, gels, and extracts that may be converted into carbonated liquids, electricity liquids, or sweetened liquids through retailers. These merchandise are subject to excise tax; however, the pricing shape may be complex.
The excise price for those items might be calculated primarily based on the better of viable values:
- The price posted through the tax authority in its general price list (if available).
- The “Designated Selling Price” of the items, which is said through the importer or producer. This price ought to be declared earlier than any reductions or offers, with tax deductions calculated as consistent with the mechanism supplied in Clause thirteen of Cabinet Decision No. fifty-two of 2019.
The decision additionally defines the term “Designated Selling Price” because the price is set through retailers, making sure that the excise tax displays the real marketplace price of those items. Retailers will want to preserve accurate statistics of the prices they promote those items for and any deductions made to make certain right tax calculation and compliance.
For merchandise now no longer explicitly addressed withinside the preceding paragraph, the excise price is decided consistent with Clause 13 of Cabinet Decision No. 52 of 2019. This guarantees consistency in pricing for all merchandise problems to excise tax.
Revocation of Previous Decisions
As a part of the brand new guidelines, Ministerial Decision No. 1 of 2025 abrogates Ministerial Decision No. 236 of 2019, which had formerly addressed the implementation of Cabinet Decision No. fifty-two of 2019. This revocation guarantees that the regulatory framework is streamlined and up-to-date, reflecting the ultra-modern coverage decisions.
Additionally, any provisions in advance decisions that battle with the brand new guidelines are also abrogated. This is a critical flow to save you any inconsistencies or confusion withinside the criminal framework, making sure that the tax authority and corporations have a clean, unified know-how of excise tax requirements.
Publication and Effectiveness
Ministerial Decision No. 1 of 2025 got here into impact right now upon its guide on January 3, 2025. It was formally posted inside the UAE’s Official Gazette, signaling its on-the-spot implementation. Businesses concerned with the production, distribution, and retail of excise items ought to now observe those up-to-date rules.
Conclusion
The issuance of Ministerial Decision No. 1 of 2025 is a critical development in the UAE’s excise tax regime. By clarifying the application of excise tax UAE 2025 to electronic smoking devices and consumables like concentrates and extracts, the decision helps ensure better regulatory alignment across the Gulf Cooperation Council countries. Businesses must now be diligent in adjusting their practices to comply with these updates, ensuring proper tax calculation and reporting. For consumers, these regulations promise greater transparency and consistency in the pricing of excise goods in the UAE. ebs chartered accountants can help businesses in the complexities of Excise tax UAE 2025 by ensuring the accurate tax calculations on time by avoiding the penalties
FAQs
What is Ministerial Decision No. 1 of 2025?
It updates excise tax regulations in the UAE for electronic smoking devices, liquids, and certain consumables.
When did the Ministerial Decision come into effect?
It came into effect immediately on January 3, 2025.
What products are subject to excise tax under this decision?
Electronic smoking devices, liquids, concentrates, powders, gels, and extracts for liquids are subject to excise tax.
Does the decision replace any previous regulations?
Yes, it revokes Ministerial Decision No. 236 of 2019 and any conflicting provisions.