Insights Compliance
Excise Tax Penalties UAE: What Triggers Fines and How to Avoid Them
Excise tax penalties in the UAE — the current dirham amounts for late registration, missed monthly returns, wrong declarations and seized stock.
Key takeaways
- Late excise registration is AED 10,000 — and there is no registration threshold, so a single pallet of energy drinks creates the same obligation as a national distributorship.
- Late payment is 14% per annum, charged monthly, under Cabinet Decision No. 129 of 2025, which has applied since 14 April 2026 and replaced the older escalating mechanic.
- A late excise return is AED 1,000 the first time and AED 2,000 on repetition within 24 months — and excise returns are monthly, so the window comes round twelve times a year.
- Designated zone breaches cost the higher of AED 50,000 or 50% of the tax chargeable on the goods involved, the heaviest fixed exposure in the excise table.
- Cabinet Decision No. 197 of 2025 re-rated excise from 1 January 2026 — sweetened drinks moved to AED 0.79 or AED 1.09 per litre by sugar content, and no accepted lab report means the highest band.
- Voluntary disclosure carries 1% per month on the tax difference; failing to disclose before the FTA notifies you of an audit adds a fixed 15% on top.
Short answer. UAE excise tax penalties come from Cabinet Decision No. 40 of 2017 and its amendments, currently Cabinet Decision No. 129 of 2025 in force since 14 April 2026. Late registration is AED 10,000, a late return is AED 1,000 rising to AED 2,000 on repetition, late payment runs at 14% per annum charged monthly, and a designated zone breach costs the higher of AED 50,000 or 50% of the tax on the goods.
Most conversations about excise tax in the UAE start with the rate and end with the return, and that framing is exactly what lands businesses in trouble. Excise is not a filing exercise the way VAT is. It is a tax on specific physical goods, and the whole regime assumes those goods can be counted, traced and inspected. A VAT error is a number on a form. An excise error can be a pallet in your own warehouse.
Two things changed recently that make most published excise guidance out of date. Cabinet Decision No. 197 of 2025 re-rated the whole regime from 1 January 2026. Cabinet Decision No. 129 of 2025 rewrote the penalty tables from 14 April 2026. This guide uses the current text of both.
The excise penalty schedule, in dirhams
These are the amounts that apply today. Table 1 of Cabinet Decision No. 40 of 2017 covers violations of Federal Decree-Law No. 28 of 2022 on Tax Procedures and applies across every federal tax, including excise.
| Violation | Administrative penalty |
|---|---|
| Failure to keep the required records | AED 10,000; AED 20,000 on repetition within 24 months |
| Failure to submit records and documents in Arabic when the FTA requests them | AED 5,000 |
| Failure to submit a registration application within the specified timeframe | AED 10,000 |
| Failure to submit a deregistration application in time | AED 1,000 monthly, capped at AED 10,000 |
| Failure to inform the FTA of a change requiring amendment of the tax record | AED 1,000; AED 5,000 on repetition within 24 months |
| Failure of a registrant to submit the tax return in time | AED 1,000 first time; AED 2,000 on repetition within 24 months |
| Failure to settle the payable tax in time | 14% per annum, monthly, on the unsettled amount |
| Submitting an incorrect tax return | AED 500, unless corrected within the return deadline |
| Submitting a voluntary disclosure on an error | 1% per month on the tax difference |
| Failing to submit a voluntary disclosure before being notified of an audit | Fixed 15% of the tax difference, plus 1% per month |
| Failure to offer facilitation to the tax auditor | AED 20,000 |
| Failure to calculate tax due on the import of goods | 50% of the unpaid or undeclared tax |
Source: Table 1 appended to Cabinet Decision No. 40 of 2017 and its amendments, as published by the UAE Ministry of Finance. Table amended by Cabinet Decision No. 129 of 2025, effective 14 April 2026. Last verified 4 August 2026.
Table 2 of the same decision is excise-specific. It is short, and every line is a process failure rather than a tax failure — which is precisely why the FTA collects on it so easily.
| Excise-specific violation | Administrative penalty |
|---|---|
| Failure of the taxable person to display prices inclusive of tax | AED 5,000 |
| Failure to comply with the conditions and procedures for transferring excise goods from one designated zone to another, and with the mechanism for preserving, storing and processing them | The higher of AED 50,000 or 50% of the tax chargeable on the goods |
| Failure to provide the FTA with the price lists of excise goods produced, imported or sold | AED 5,000 first time; AED 10,000 on repetition |
Source: Table 2 appended to Cabinet Decision No. 40 of 2017, as amended by Cabinet Decision No. 49 of 2021. Last verified 4 August 2026.
What the late-payment mechanic actually costs
The 14% per annum figure sounds mild next to the old escalating percentages, and that leads people to under-model it. It is charged monthly, on the unsettled amount, from the day after the due date, and it keeps running.
| Unsettled excise tax | Penalty after 1 month | After 6 months | After 12 months |
|---|---|---|---|
| AED 50,000 | AED 583 | AED 3,500 | AED 7,000 |
| AED 150,000 | AED 1,750 | AED 10,500 | AED 21,000 |
| AED 400,000 | AED 4,667 | AED 28,000 | AED 56,000 |
Illustrative arithmetic on the 14% per annum monthly penalty in Table 1 of Cabinet Decision No. 40 of 2017 as amended, applied to a static unsettled balance. Prepared 4 August 2026. Actual charges depend on the balance outstanding in each month and the due date determined under the decision — this is a scale illustration, not a computation of your liability.
Where the liability arises from a voluntary disclosure or a tax assessment rather than a return, the decision sets the due date for the penalty at 20 business days from the date the disclosure was submitted, or 20 business days from receipt of the assessment. That window is the one to diarise.
AED 10,000
Penalty for failing to submit an excise tax registration application within the specified timeframe — and excise has no registration threshold at all
Why excise has no registration threshold
VAT registration turns on AED 375,000 of taxable supplies. Corporate tax registration turns on being a taxable person. Excise registration turns on nothing at all — the UAE Government portal at u.ae states plainly that there is no registration threshold for excise tax, and that any business intending to import excise goods, produce them for consumption in the State, stockpile them in certain cases, or oversee an excise warehouse or designated zone must register.
| Activity | Registration required | Threshold |
|---|---|---|
| Importing excise goods into the UAE | Yes | None |
| Producing excise goods for consumption in the UAE | Yes | None |
| Stockpiling excise goods in certain cases | Yes | None |
| Overseeing an excise warehouse or designated zone | Yes | None |
Source: the UAE Government portal at u.ae, which states there is no registration threshold for excise tax. Last verified 4 August 2026.
That absence of a threshold produces the most common excise penalty we see. A trading company adds a line of energy drinks to an existing import book, treats it as a minor product extension, and does not register. The activity is taxable from the first shipment, the registration is late, and the AED 10,000 lands regardless of the volume involved. Our guide to excise tax registration in the UAE walks the process; the point here is only that registration is a pre-launch gate, sequenced with the trade licence and the customs code.
The 2026 rate reset, and the penalty hidden inside it
Cabinet Decision No. 197 of 2025 did more than change numbers. It changed what you have to prove.
| Excise good | Rate or amount from 1 January 2026 |
|---|---|
| Tobacco and tobacco products | 100% |
| Liquids used in electronic smoking devices and tools | 100% |
| Electronic smoking devices and tools | 100% |
| Energy drinks | 100% |
| Sweetened drinks, 8g or more of sugar and other sweeteners per 100ml | AED 1.09 per litre |
| Sweetened drinks, 5g or more but under 8g per 100ml | AED 0.79 per litre |
| Sweetened drinks, under 5g per 100ml | AED 0 per litre |
| Sweetened drinks with only artificial sweeteners, or artificial sweeteners plus under 5g | AED 0 per litre |
Source: Article 10, Cabinet Decision No. 197 of 2025, as published by the UAE Ministry of Finance, effective 1 January 2026. Last verified 4 August 2026.
The penalty is in Article 13(4). A person dealing in sweetened drinks must submit a laboratory report the Federal Tax Authority accepts, proving the quantity of sugar and other sweeteners and whether the drink contains artificial sweeteners. Where that report is not submitted, the tax is imposed at the category with the highest quantity of sugar — AED 1.09 per litre — and only reassessed under the correct band once an acceptable report is produced.
That is not an administrative penalty in the Cabinet Decision No. 40 sense. It is worse in one way and better in another: there is no fine, but you fund the highest band on every litre until the paperwork exists. On a container of low-sugar juice, the difference between AED 0 per litre and AED 1.09 per litre is the entire economics of the shipment.
Two further mechanics decide which band a product lands in. Article 10(3) counts naturally occurring sugar within the total wherever added sugar or other sweeteners are also present. Article 10(2) requires the sugar in concentrates, powders, gels and extracts to be calculated on the final product form per the producer’s guidelines, and lets the Authority determine the calculation mechanism where those guidelines are unavailable or proven inaccurate.
What is no longer an excise good
Article 2 of Cabinet Decision No. 197 of 2025 lists five categories: tobacco and tobacco products; liquids used in electronic smoking devices and tools; electronic smoking devices and tools; energy drinks; and sweetened drinks. Carbonated drinks as a standalone category are gone — a carbonated drink is now caught, or not caught, on its sugar content like any other sweetened drink.
Article 7(5) then carves specific things out of the sweetened drinks definition altogether.
| Excluded from “sweetened drinks” | Condition |
|---|---|
| Milk-based beverages | At least 75% milk of the ready-to-drink beverage |
| Milk substitute beverages | At least 75% milk substitutes of the ready-to-drink beverage |
| Baby formula, follow-up formula, baby food | As described in the decision |
| Special dietary use beverages | Per GSO Standard 654 |
| Beverages for medical purposes | Per GSO Standard 1366 |
| Restaurant-prepared beverages | Served to end consumers in open, unsealed containers for direct consumption |
Source: Article 7(5), Cabinet Decision No. 197 of 2025. Article 8 separately excludes alcohol-containing drinks from the energy drink and sweetened drink categories. Last verified 4 August 2026.
These exclusions are where classification disputes start. A 70% milk beverage is a sweetened drink; a 76% milk beverage is not. The evidence for which side of that line a product sits on is the producer’s specification and, where the Authority asks for it, a laboratory report.
The five control failures behind almost every excise penalty
Across the excise regime, the exposures cluster around a small number of root causes. Each maps to a penalty in the tables above, and each has a closable control.
- Registering after the first taxable movement. The obligation attaches to the activity, not to turnover. Penalty: AED 10,000. Control: registration sits in the pre-launch sequence.
- Missing the monthly deadline. Excise returns are monthly, due by the 15th day following the end of the tax period. Penalty: AED 1,000, then AED 2,000 on repetition, plus 14% per annum on any unpaid tax. Control: a fixed filing calendar and reserved funds.
- A declared quantity that does not tie to physical stock. Penalty: AED 500 for an incorrect return, plus the disclosure or assessment consequences on the tax difference. Control: a monthly physical count reconciled to the declared position.
- Moving goods out of a designated zone without the corresponding record. Penalty: the higher of AED 50,000 or 50% of the tax on the goods. Control: no outbound movement without a declaration entry.
- Sweetened drinks with no accepted laboratory report. Consequence: taxed at AED 1.09 per litre until the report exists. Control: a lab report on file for every SKU before the first import.
Every excise penalty traces back to a broken reconciliation between physical stock and the declared position. Fix that one control — count the goods, match them to the return, do it every month — and most of the penalty schedule stops being a threat.
Digital Tax Stamps and tobacco
Tobacco carries an additional control layer. Cabinet Decision No. 42 of 2018 on Marking Tobacco and Tobacco Products, issued in July 2018, requires Digital Tax Stamps to be fixed on specified locally produced excise goods inside the production facility immediately after packaging, or before import in the case of imported tobacco products. The scheme took effect on 1 January 2019.
The Federal Tax Authority has approved two stamp types. A red stamp is for tobacco products authorised for distribution in UAE markets and at duty-free for arriving travellers. A green stamp is for sales at duty-free to departing travellers. The scheme exists so that stock which has not met its tax obligations is visible on inspection at markets and at customs ports.
The practical consequence for a distributor is that stamp status becomes part of goods-in and goods-out control. Nothing moves unless it is both declared and, where required, stamped — because on inspection the absence of a stamp is not an argument you can have.
Voluntary disclosure: the arithmetic of coming forward
The penalty schedule is built to make self-correction the cheaper path, and the gap between the two outcomes is large enough to be worth modelling before you decide.
| Scenario | Penalty on the tax difference |
|---|---|
| You file a voluntary disclosure before any audit notification | 1% per month, from the day after the return due date to the disclosure date |
| You file a voluntary disclosure after being notified of an audit | Fixed 15%, plus 1% per month to the disclosure date |
| You never disclose and the FTA assesses you | Fixed 15%, plus 1% per month to the date the assessment is issued |
Source: Table 1, items 11 and 12, Cabinet Decision No. 40 of 2017 as amended. Last verified 4 August 2026.
On an AED 200,000 tax difference discovered eight months after the return was due, disclosing voluntarily costs roughly AED 16,000 in penalty. Waiting until the FTA notifies an audit adds a fixed AED 30,000 on top of the same monthly charge. The fixed 15% is the price of being found rather than telling.
Two things make a disclosure work. Get the numbers right first — a disclosure is itself a formal submission, and a wrong one is a new problem. And have the records behind it: the import and production documentation, the stock movements, and the calculation showing how the corrected figure was reached. This is where clean accounting and bookkeeping earns its keep, because a disclosure is only as defensible as the ledger under it.
A worked example: a Dubai beverage importer, from first shipment to disclosure
Take a mainland Dubai company that has imported soft drinks for years and adds two new lines in early 2026 — an energy drink and a fruit-based sweetened drink. Here is where each rule lands, in order.
Month one — registration. The energy drink is an excise good under Article 2 of Cabinet Decision No. 197 of 2025. There is no threshold, so the obligation arises before the first shipment clears. If the company imports first and registers second, the penalty is AED 10,000 and it is not negotiable by volume.
Month one — classification. The energy drink is 100% of the excise price. The fruit-based drink needs a sugar test. Suppose it comes in at 6.2g of sugar and other sweeteners per 100ml, which places it in the AED 0.79 per litre band. Without an accepted laboratory report the FTA would tax it at AED 1.09 per litre instead. On 40,000 litres, that band difference is AED 12,000 of tax on one container, paid because a report was missing rather than because anything was owed.
Month one — the excise price. For the energy drink at 100%, Article 11 sets the excise price as the higher of the FTA’s published standard price list price and the designated retail sales price less the tax included in it. Article 11(2) adds that for goods taxed at 100%, the tax included in a designated retail sales price is equal to half that price. Getting this backwards is one of the more common calculation errors on a first return.
Month two — the return. The excise return is monthly, due by the 15th day following the end of the tax period. Filing on the 16th costs AED 1,000. Filing on the 16th again in month five costs AED 2,000, because it is a repetition within 24 months.
Month seven — the error surfaces. An internal stock count shows 3,000 litres of the fruit drink were released to the market and never declared. At AED 0.79 per litre that is AED 2,370 of tax. The company files a voluntary disclosure. The disclosure penalty is 1% per month on the tax difference for the months elapsed — a small number here, but the same mechanic on a AED 200,000 error would be AED 2,000 a month.
What it would have cost to wait. Had the FTA notified an audit first, the same AED 2,370 would carry a fixed 15% on top of the monthly charge. The fixed element is the price of being found rather than telling, and it scales with the size of the error, not the size of the business.
What an FTA excise audit looks at
An excise audit is a physical exercise as much as a documentary one, and knowing what is on the list makes preparing for it straightforward.
| What is examined | What the auditor is testing | Where it fails |
|---|---|---|
| Registration status and effective date | Whether trading began before registration | Activity predating the registration date |
| Product classification per SKU | Whether each product is correctly categorised under Article 2 | Sweetened drinks classified as non-excise |
| Laboratory reports for sweetened drinks | Whether an accepted report supports the band claimed | No report on file, or a report that predates a reformulation |
| Excise price calculation | Whether Article 11 was applied, including the half-price rule for 100% goods | Retail price used gross of the tax included in it |
| Monthly returns against stock movements | Whether declared quantities tie to physical movement | Stock ledger never reconciled to the return |
| Designated zone entries and exits | Whether every exit into free circulation generated a declaration | Goods released with no corresponding record |
| Digital Tax Stamp status on tobacco lines | Whether stamps are present and valid | Unstamped stock on the shelf |
| Records and their language | Whether records exist and can be produced in Arabic on request | Records held only in English |
Compiled 4 August 2026 from the obligations in Federal Decree-Law No. 7 of 2017, Cabinet Decision No. 197 of 2025, Cabinet Decision No. 42 of 2018 and Federal Decree-Law No. 28 of 2022 on Tax Procedures. It is an orientation list, not an FTA-published audit programme.
Two lines on that table are worth dwelling on because they carry their own named penalties. Failing to offer facilitation to the tax auditor is AED 20,000 under Table 1, and it is due from the person’s, the legal representative’s or the tax agent’s own funds rather than the company’s. And failing to submit records and documents in Arabic when the Authority requests them is AED 5,000 — a penalty that catches businesses running entirely English-language systems.
Designated zones: the deferral and what breaks it
An excise designated zone lets goods sit without the tax becoming due, which is a genuine working-capital benefit for anyone holding stock in volume. The tax crystallises when the goods leave into free circulation, and the whole benefit depends on the movement records being complete.
The penalty attached to getting this wrong is the largest fixed amount in the excise table: the higher of AED 50,000 or 50% of the tax chargeable on the goods concerned, for failure to comply with the conditions and procedures for transferring excise goods from one designated zone to another and with the mechanism for preserving, storing and processing them.
The 50% limb is what makes it dangerous. On a consignment carrying AED 400,000 of excise tax, a designated zone breach is a AED 200,000 penalty rather than a AED 50,000 one, because the decision applies whichever figure is higher. Deferral is valuable, and it is not free of consequence. Our guide to excise designated zones in the UAE covers how the suspension works in practice.
The excise compliance calendar
| Obligation | Frequency | Deadline |
|---|---|---|
| Excise tax return | Monthly | 15th day following the end of the tax period |
| Excise tax payment | Monthly | Same date as the return |
| Physical stock reconciliation to the declared position | Monthly | Before the return is filed |
| Laboratory reports for sweetened drink SKUs | Per SKU, refreshed on reformulation | Before the first import of that SKU |
| Price lists supplied to the FTA | On request and on change | Per the FTA’s requirement |
| Registration | Once, before the first taxable activity | Before importing, producing or stockpiling |
Excise filing date per u.ae. Other lines are operating practice built around the obligations in Federal Decree-Law No. 7 of 2017 and Cabinet Decision No. 197 of 2025. Last verified 4 August 2026.
What excise non-compliance costs beyond the fine
The headline penalty is often not the largest part of the cost. A pattern of late returns signals weak controls, and weak controls attract an audit that reaches back across the full record retention window rather than the period that triggered it.
Stock problems are a different order of cost. When goods are held without the stamp the scheme requires, the loss is the inventory itself — the purchase cost, the margin it would have carried, and the customer commitments it was supposed to fulfil. No return penalty comes close, and it is entirely preventable with a stamp-and-declaration check on every movement.
Then there is the compounding effect of the sugar-band default. A business importing sweetened drinks without accepted laboratory reports is not being fined at all. It is simply paying AED 1.09 per litre on product that might be a zero-rated band, month after month, with the overpayment only recoverable once the reports exist and the position is corrected.
How excise penalties compare with VAT and corporate tax
The tables share a spine and differ at the edges, and mixing them up produces bad estimates.
| Obligation | Excise | VAT | Corporate tax |
|---|---|---|---|
| Late registration | AED 10,000 | AED 10,000 | AED 10,000 |
| Late return | AED 1,000, then AED 2,000 | AED 1,000, then AED 2,000 | AED 500/month, then AED 1,000/month from month 13 |
| Late payment | 14% per annum monthly | 14% per annum monthly | 14% per annum monthly |
| Return frequency | Monthly | Standard tax period of three months | Annual |
| Registration threshold | None | AED 375,000 taxable supplies | None for the registration obligation |
Excise and VAT: Cabinet Decision No. 40 of 2017 as amended. Corporate tax: Cabinet Decision No. 75 of 2023, amended by Cabinet Decision No. 10 of 2024. Last verified 4 August 2026.
The asymmetry worth noticing is the return penalty. A late excise or VAT return is a one-off amount. A late corporate tax return accrues every month, which is why a corporate tax filing that slips by eighteen months carries AED 12,000 in filing penalties alone. The wider regional picture, including how the UAE compares on excise and penalties across the Gulf, sits in our GCC tax comparison.
The preventive checklist
Almost every excise penalty above is preventable, and the prevention is disciplined rather than complicated.
- Register before you trade. Excise registration belongs beside the trade licence and customs code in the pre-launch sequence.
- File monthly, on time, every time. Treat the 15th as immovable and reserve the tax so a payment is never late for cash-flow reasons.
- Reconcile stock every month. A discrepancy you find is a correction. The same discrepancy found by an inspector is a penalty.
- Hold a laboratory report for every sweetened drink SKU. Without it you pay the top band by operation of Article 13(4), not by mistake.
- Check stamps and declarations on every movement. Build it into goods-in and goods-out rather than running it as a periodic audit.
- Keep the records. Registration details, returns, import and production documentation, stock and stamp records, and every calculation behind a declared figure.
- Disclose early when you find an error. 1% per month beats 15% plus 1% per month, every time.
Where this leaves your excise compliance
Excise tax penalties in the UAE look intimidating listed out — AED 10,000 here, AED 50,000 there, 14% per annum running underneath. They are also among the most preventable exposures in the UAE tax system, because every one maps to a specific control at a specific point in the flow of physical goods.
The businesses that get caught are almost never the ones that lost a difficult judgement call. They are the ones that treated a physical-goods tax like a paperwork tax and stopped counting. Pair a disciplined excise process with monthly accounting and bookkeeping so the stock ledger and the tax position never drift apart. If you are weighing up whether to bring that work in-house or outsource it, our note on choosing a tax consultant in Dubai sets out the questions worth asking first.
Velmont Crest is a DED-licensed UAE accounting firm providing advisory, preparation and compliance support across excise tax, VAT, corporate tax and the wider UAE tax framework for mainland and free zone businesses. Read more on our insights hub or get in touch via our contact page.
Disclaimer: Velmont Crest is a DED-licensed accounting firm providing advisory, preparation and compliance support services. We are not a law firm, an FTA-registered tax agent representing clients before the FTA, or a licensed financial-services provider. Excise rates, penalty amounts and Digital Tax Stamp requirements are set by UAE law and change by decree — the figures here were verified on 4 August 2026 against the published texts, and you should confirm the current position with the FTA before acting on any of them.
References
- UAE Federal Tax Authority — Excise Tax
- Cabinet Decision No. 197 of 2025 on Excise Goods, Tax Rates and the Methods of Calculating the Excise Price
- Cabinet Decision No. 40 of 2017 and its amendments — administrative penalties
- Cabinet Decision No. 42 of 2018 on Marking Tobacco and Tobacco Products
- UAE Government portal — Excise tax
Frequently asked questions
- What is the penalty for late excise tax registration in the UAE?
- AED 10,000. Table 1 appended to Cabinet Decision No. 40 of 2017, as amended by Cabinet Decision No. 129 of 2025 and in force since 14 April 2026, sets a penalty of AED 10,000 for failure of a taxable person to submit a registration application within the timeframe specified in the tax law. Excise has no registration threshold at all, which is what makes this the most common excise exposure — the obligation attaches to importing, producing or stockpiling excise goods, not to reaching a level of turnover.
- How much is the penalty for filing an excise return late?
- AED 1,000 for the first late return, and AED 2,000 for each repeated late return within 24 months of the last one, under Table 1 of Cabinet Decision No. 40 of 2017 as amended. Excise returns are filed monthly, by the 15th day following the end of the tax period, so a business that slips into a habit of late filing is paying AED 2,000 a month rather than AED 1,000 once. Note that the return penalty and the payment penalty are separate — filing on time and paying late still costs money.
- What is the penalty for paying excise tax late?
- A monthly penalty of 14% per annum on the unsettled payable tax, running from the day following the due date and applied on the same date each month thereafter. This is the mechanic introduced by Cabinet Decision No. 129 of 2025, effective 14 April 2026. Where the liability arises from a voluntary disclosure or a tax assessment, the due date for this purpose is 20 business days from the date of submission of the disclosure, or 20 business days from receipt of the assessment.
- Can the FTA seize my excise stock?
- Excise is the UAE tax where the exposure can attach to the goods rather than only to a return. Goods that were required to carry a Digital Tax Stamp under Cabinet Decision No. 42 of 2018 and do not are visible on inspection, and the marking scheme exists specifically so that untaxed stock can be identified at market and at customs ports. Separately, failing to comply with the conditions and procedures for moving excise goods between designated zones carries a penalty of the higher of AED 50,000 or 50% of the tax chargeable on the goods concerned.
- What is the penalty for a designated zone breach?
- The higher of AED 50,000 or 50% of the tax, if applicable, chargeable on the goods in relation to the violation. Table 2 of Cabinet Decision No. 40 of 2017, as amended by Cabinet Decision No. 49 of 2021, applies this to failure to comply with the conditions and procedures for transferring excise goods from one designated zone to another and with the mechanism for preserving, storing and processing those goods. It is the largest fixed amount in the excise-specific table, and it scales with the value of the stock.
- What is a voluntary disclosure and what does it cost?
- It is the formal mechanism for telling the Federal Tax Authority about an error in a submitted return, assessment or refund application before the FTA finds it. Filing one carries a penalty of 1% per month on the tax difference, running from the day after the due date of the return until the disclosure is submitted. Not filing one before the FTA notifies you that you will be subject to a tax audit is considerably worse: a fixed penalty of 15% of the tax difference, plus the same 1% per month. The arithmetic is deliberately built to reward coming forward first.
- How long do I have to keep excise tax records in the UAE?
- The retention obligation runs under Federal Decree-Law No. 28 of 2022 on Tax Procedures and the excise legislation, and covers registration details, monthly returns, import and production documentation, stock movement and inventory records, Digital Tax Stamp records where they apply, and the calculations behind every declared figure. Failure to keep the required records is AED 10,000, rising to AED 20,000 for a repeated violation within 24 months. Confirm the applicable retention period for your activity with the FTA, because it varies with the type of record and the business.
- Did the UAE excise rates change in 2026?
- Yes. Cabinet Decision No. 197 of 2025, issued 27 November 2025 and effective 1 January 2026, repealed Cabinet Decision No. 52 of 2019 in full. Tobacco and tobacco products, liquids for electronic smoking devices, the devices themselves, and energy drinks all stay at 100%. Sweetened drinks moved to a per-litre amount by sugar content: AED 1.09 at 8g or more per 100ml, AED 0.79 from 5g to under 8g, and nil below 5g or where only artificial sweeteners are used. Carbonated drinks are no longer a standalone excise category.
- What happens if I cannot prove the sugar content of a drink?
- You are taxed at the highest band until you can. Article 13(4) of Cabinet Decision No. 197 of 2025 obliges the person to submit a laboratory report the Federal Tax Authority accepts, proving the quantity of sugar and other sweeteners and whether the drink contains artificial sweeteners. Where no such report is submitted, the tax is imposed at the category with the highest quantity of sugar and other sweeteners — AED 1.09 per litre — and only accounted for under the correct category once an acceptable report is produced.
- Is naturally occurring sugar counted in the excise calculation?
- Yes, where the drink also contains added sugar or other sweeteners. Article 10(3) of Cabinet Decision No. 197 of 2025 provides that if a sweetened drink contains naturally occurring sugar in addition to added sugar or other sweeteners, the naturally occurring quantity is counted within the total for banding purposes. A juice with a modest amount of added sweetener is therefore measured on its whole sugar content, which can push it into a band a producer did not expect.
- Do I need to register for excise tax if I only import occasionally?
- Almost certainly yes. The UAE Government portal states that there is no registration threshold for excise tax, and that any business intending to import excise goods, produce them for consumption in the UAE, stockpile them in certain cases, or oversee an excise warehouse or designated zone must register. Occasional or small-volume activity does not change the obligation, and late registration is AED 10,000 regardless of how little was imported.
- What is the penalty for not giving the FTA my excise price lists?
- AED 5,000 the first time and AED 10,000 on repetition, under Table 2 of Cabinet Decision No. 40 of 2017 as amended by Cabinet Decision No. 49 of 2021, for failure of a taxable person to provide the Authority with the price lists of the excise goods it produces, imports or sells. Separately, failure to display prices inclusive of tax is AED 5,000. Both are process failures rather than tax failures, which is why they are so easy to collect.
- Are excise penalties and VAT penalties the same?
- They share a schedule but not every line. Cabinet Decision No. 40 of 2017 appends three tables: Table 1 covers violations of the Tax Procedures Law and applies across taxes, Table 2 is specific to excise under Federal Decree-Law No. 7 of 2017, and Table 3 is specific to VAT under Federal Decree-Law No. 8 of 2017. Registration, return, payment and record penalties come from Table 1 and are common. Designated zone, price list and price display penalties differ between the excise and VAT tables.
- Can excise penalties be reduced or waived?
- The Federal Tax Authority operates processes for requesting instalments, waivers and refunds of administrative penalties, and separately for objecting to a penalty through the procedures in the tax procedures legislation. Neither is a routine outcome and neither is something to plan around. The reliable way to reduce exposure is the one built into the schedule itself: correct an error by voluntary disclosure before you are notified of an audit, and pay the 1% per month rather than the 15% fixed penalty plus 1% per month.
Filed under: excise tax penalties uae, excise tax, FTA, voluntary disclosure, designated zone, tax compliance, UAE excise, penalties
Published · Updated
