UAE President His Highness Sheikh Khalifa bin Zayed Al Nahyan has issued a federal decree-law on excise tax, which will be imposed on selected products, as determined by the Council of Ministers.

As per the new law, excise tax rates that shall be imposed on the "excise goods", which, along with the method of calculating the excise price, are subject to a decision by the Council of Ministers, upon the recommendation of the Minister of Finance, provided that the tax rates do not exceed 200 per cent of the excise price, a Wam news agency report said.

At a meeting in December 2016, the Supreme Council of the Gulf Cooperation Council (GCC) issued a resolution on excise goods list, which contains tobacco products, energy drinks and certain soft drinks.

"We are making remarkable progress in our plans to establish a sound legislative infrastructure to support the UAE’s tax system and make sure it meets and exceeds international best practices," said Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai and UAE Minister of Finance and chairman of the Federal Tax Authority (FTA).

"The project diversifies the government’s revenue streams and boosts its resources, which, in turn, will strengthen the economy and ensure its sustainability," Sheikh Hamdan added. "The excise tax, in particular, will help us build a healthier and safer society. This tax is set to discourage the consumption of products that negatively impact the environment and, more importantly, people’s health, while the revenues it generates will go towards supporting advanced services for all members of society."

Under the law, the FTA may exempt a person from registration, but not payment of tax, if they can demonstrate that they will not regularly import excise goods. However, anyone who has been exempted from tax registration must immediately inform the authority of any changes to his/her circumstances that would make them subject to tax, and they must do so within the allotted timeframe and in accordance with the procedures stated in the executive regulation of the decree-law.

The new decree-law states that the executive regulation shall determine the procedures, controls and conditions for tax registration, tax deregistration, and rejecting registration and deregistration applications.