Cabinet Resolution No. (38) of 2017 Concerning the Excise Goods, Excise Tax Rates and Method of Calculating Excise Price (tax law)

Article (1)  
Definitions  
For the purpose s of applying the provisions of this Resolution, the following words and 
expressions shall have the meanings assigned thereto respectively, unless the context requires 
otherwise:  
State  : The United Arab Emirates.  
Authority  : The Federal Tax Authority.  
Tax  : The Excise Tax.  
Decree -Law  : Federal Decree -Law No. (7) of 2017 Concerning the  Excise 
Tax. Cabinet Resolution of 20 17 Concerning the Excise Goods, Excise Tax Rates, and Method of Calculating Excise Price  2 
 Excise Goods  : Goods to be defined as taxable goods herein . 
Taxable Person  : Each person that is, or ought to be, registered for the tax 
purposes pursuant to the provisions of the Decree -Law . 
Importer  : The natural or legal person that acts as the importer of 
excise goods on the date of importation for the purposes 
of customs clearance . 
Excise Price  : The price calculated in accordance wi th the provisions of 
this Resolution . 
Value Added Tax (VAT)  : A tax levied on the importation and supply of goods and 
services in accordance with Federal Decree -Law No. (8) of 
2017 Concerning the Value -Added Tax (VAT) .

Article (2)  
Excise Goods  
For the purposes of article (2) of the Decree -Law , the t ax shall be levied  on the following excise 
goods:  
1. Tobacco and its products . 
2. Soft drink s.  
3. Energy drinks.

Article (3)  
Tobacco and Its Products  
For the purposes of article (2) of this Resolution, tobacco and its products shall include all items 
set forth  in Chapter ( 24) of the Common Customs Tariff of the GCC States, which are imported, 
cultivated or produced in the State.  
 
  Cabinet Resolution of 20 17 Concerning the Excise Goods, Excise Tax Rates, and Method of Calculating Excise Price  3

Article (4)  
Soft Drink s  
1. For the purposes of article (2) of this Resolution, soft drink s shall mean all of the following:  
a. Any beverage that contains carbonated water, except for unflavored  carbonated water.   
b. Any  concentrates, powder, gel, or extracts that can be converted into soft drinks .  
2. For the purposes of this Article, soft drink s shall not include any beverage containing alcohol, 
even if the product is considered a soft drink .  
3. If the product referred to in Paragraph (b) of Clause (1) of this Article is previously taxed  in the 
State ; the soft  drink  produced from  mixing such  product with a gaseous agent at the place of 
selling the product  by a non -taxable person shall not be deemed  as an excise good s for the 
purposes of the Decree -Law and no tax shall be due there on. Further, the tax paid on the 
product referred to in Paragraph (b) of Clause (1) of this Article may not be deemed as a 
deductible tax in accordance with  article (16) of the Decree -Law.  
4. If any product  is compatible with the definition  of soft drink s set out in this Article and also 
compatible with the definition of energy drink s set out in article (5) of this Resolution , such 
product  shall be classified a s an energy drink and shall be taxed at the rate applicable to 
energy drinks.

Article (5)  
Energy Drinks  
1. For the purposes of article (2) of this Resolution, energy drinks shall mean all of the following:  
a. Any  beverages marketed or sold as energy drink s that may contain stimulant s or provide 
mental and physical stimulation, includ ing but not limited to caffein e, taurine, ginseng 
and guarana  and any ingredients that h ave an identical or similar effect as the said  
ingredients . 
b. Any concentrates, powder, gel, or extracts that can be converted into energy  drink s.  
2. For the purposes of this Article, energy drinks shal l not include any beverage containing 
alcohol, even if the product is considered an energy drink .  Cabinet Resolution of 20 17 Concerning the Excise Goods, Excise Tax Rates, and Method of Calculating Excise Price  4 
 3. If the product referred to in Paragraph (b) of Clause (1) of this Article is previously taxed in the 
State; the energy drink produced from mixing such product with any other products at the 
place of selling the product by a non -taxable person shall not be deemed as an excise goods 
for the purposes of the Decree -Law and no further tax shall be due thereon. Further, the tax 
paid on the product referred to in Paragraph (b) of Clause (1) of this Article may not be 
deemed as a deductible tax in accordance with A rticle (16) of the Decree -Law.

Article (6)  
Tax Rate  
For the purposes of  article (3) of the Decree -Law, the t ax shall be levied  on the excise goods 
referred to  in article (2) of this Resolution as per  the following rate s:  
Excise Goods  Rate  (%)  
Tobacco and its products  100%  
Soft Drinks  50%  
Energy Drinks   100%

Article (7)  
Excise Price  
1. In accordance with  article (3) of the Decree -Law, the excise price shall be the higher of:  
a. The price declared  by the Authority for the excise good s in the price list issued thereby, if 
any . 
b. The designated retail  price for such goods, less the tax included therein.  
2. In order to deduct the value of the t ax included in the designated retail  price , the following 
calculations shall  be used:  
a. As to  the e xcise goods taxable at a rate of (50%) of the excise price, the excise price shall 
be equ al to two thirds of the designated retail  price  of such goods .  
b. As to the excise goods taxable at a rate of (10 0%) of the excise price, the excise price shall 
be equal to  half of the designated retail  price of such goods .  Cabinet Resolution of 20 17 Concerning the Excise Goods, Excise Tax Rates, and Method of Calculating Excise Price  5 
 3. Notwithstanding the provision of Paragraph (b) of Clause (1) of this Article, the excise price 
of soft drink s referred to  in Paragraph (b) of Clause (1) of article (4) of this Resolution shall be 
calculated in accordance with the mechanism determined  by the Minister of Finance.

Article (8)  
Designated Retail  Price   
1. For the purposes of article (7) of this Resolution, the designated retail  price  shall be the higher 
of: 
a. The recommended retail  price of the excise good s, which is specified, declared,  and affixed 
to the goods by the importer or producer. “The recommended retail  price of the excise 
goods ” shall mean the price achieved when the excise goods are sold for retail purposes 
directly to the consumer, and it shall not include the cases  of increasing the price due to 
selling the excise goods in a hotel, restaurant,  or similar facility  for the purpose of 
consumption in such facilities .  
b. The average retail  price of the goods in the market.  
2. For the purposes of Paragraph (b) of Clause (1) of this Article, the taxable person shall 
calculate the average retail  price of the goods in the market as follows:  
a. Identify ing the different retail  prices of the excise goods in the market based on the 
previous twelve months . 
b. Deduct ing the value of the t ax included in the retail  price in the market in accordance with 
Clause (2) of article (7) of this Resolution or, if the retail  price relates to a period preceding 
the application  of the tax, the full value of the retail  price in the market  shall be used . 
c. Calculat ing the total excise goods sold at eac h retail  price in the market in order to define  
the total revenue s in the market  for the period of  twelve month s. 
d. Divid ing the total revenues in the market by the total excise goods sold during the twelve -
month  period . 
e. Multiply ing the quotient as referred to in  Paragraph (d) by the tax rate  applicable to the 
excise goods to arrive at the assumed  tax due on the excise goods . Cabinet Resolution of 20 17 Concerning the Excise Goods, Excise Tax Rates, and Method of Calculating Excise Price  6 
 f. Add ing the resulting values  as referred to in P aragraphs (d) and (e) together to arrive at 
the average retail  price of such  goods in the market.  
3. The  taxable person  shall re -calculate the average retail price  of the goods in the market at least 
once every six (6)  month s. In the event that  the calculation of the average retail price  results 
in adjust ing the designated retail  price  in accordance with  Clause (1) of this Article, such  
adjustment shall  be made  from the tax period following the calculation of the average retail 
price , or the tax period following the date in which the calculation is supposed to be made, 
whichever i s earlier .  
4. If the taxable person is unable to identify the designated retail  price referred to  in Paragraphs 
(a) and (b) of Clause (1) of this Article, such  taxable person shall  notify the Authority thereof 
within no less than (15) days prior to the date of submitting the tax return.  
5. In the event that  the Authority ascertains that the taxable person is unable to identify the price 
referred to in P aragraphs (a) and (b) of Clause (1) of this Article, it may permit  the taxable 
person to calc ulate  the tax based on the cost of the excise goods . 
6. The designated retail  price  shall include all the duties and taxes due on the excise goods , 
except for the value -added tax .

Article (9)  
Repeal ing Conflicting Provisions  
Any provision inconsistent or discrepant with the provisions of this Resolution is hereby repealed.  
 
  Cabinet Resolution of 20 17 Concerning the Excise Goods, Excise Tax Rates, and Method of Calculating Excise Price  7

Article (10)  
Publi cation and Enforcement   
This Resolution shall enter into force as of 1st October 2017 and  shall be published in the Official 
Gazette.  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mohammed bin Rashid Al Maktoum  
Prime Minister  
 
Issued by Us, 
On: 4 Muharram 143 9 A.H.  
Corresponding to: 24 September 2017  AD