Government also committed to implementing value-added tax as planned from 1 January

An excise tax on tobacco products, energy drinks and carbonated soft drinks will be levied in the UAE from 1 October, in line with government pronouncements earlier this year.

At the official launch of the excise tax, Khalid Ali al-Bustani, director-general of the Federal Tax Authority (FTA), told reporters in Dubai that the UAE government is also committed to implementing value-added tax (VAT) as planned from 1 January 2018. There had been speculation that the introduction of the sales tax could be delayed.

From Sunday, tobacco products and energy drinks will be taxed 100 per cent of the retail price stated on the FTA’s website, while the levy on carbonated soft drinks is 50 per cent.

Producers and importers are responsible for paying the tax to the authorities on a monthly basis, but the charge is expected to be passed on in full to consumers.

It has been estimated the excise tax will generate up to AED7bn ($1.9bn) in annual revenues for the federal budget.

Saudi Arabia implemented an identical excise tax in June.