Quick Answer
Excise tax due on most excise goods is calculated as the excise price multiplied by the applicable rate, where the excise price is the higher of the FTA’s published Standard Price List figure or the declared retail selling price (excluding VAT). For carbonated drinks at 50%, the shortcut is retail price divided by 3. For tobacco, energy drinks and e-smoking products at 100%, the shortcut is retail price divided by 2. Sweetened drinks are calculated differently since 1 January 2026: a fixed AED amount per litre based on sugar content, not a percentage of price.
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What Sets the Excise Price
Under Cabinet Decision No. 52 of 2019 on Excise Goods, Excise Tax Rates and the Methods of Calculating Excise Prices, the tax base for most excise goods is not simply “whatever the invoice says.” It is the excise price, and the excise price is fixed as the higher of two numbers:
- The FTA’s Standard Price List figure for that specific product or brand, published and periodically updated by the Federal Tax Authority.
- The declared retail selling price, meaning the price the product is actually sold to the end consumer for in the UAE market, excluding VAT.
The rule stops producers and importers from under-declaring a retail price to shrink the tax base. If a business declares AED 8 for a product the FTA has listed at AED 11, the excise price used for tax purposes is AED 11, not AED 8. A new excise product not yet on the FTA’s list is taxed on its declared retail price until the FTA formally lists a Standard Price for it.
Excise Tax Rates by Product Category
The rate applied to the excise price depends entirely on the product category. Get the category wrong and every downstream number is wrong.
| Product Category | Rate | Basis |
|---|---|---|
| Carbonated drinks | 50% | Higher of Standard Price List or declared retail price |
| Tobacco and tobacco products | 100% | Higher of Standard Price List or declared retail price |
| Energy drinks | 100% | Higher of Standard Price List or declared retail price |
| Electronic smoking devices and liquids | 100% | Higher of Standard Price List or declared retail price |
| Sweetened drinks, 8g or more sugar/sweetener per 100ml | AED 1.09 per litre | Fixed volumetric charge, not price-linked |
| Sweetened drinks, 5g to under 8g sugar/sweetener per 100ml | AED 0.79 per litre | Fixed volumetric charge, not price-linked |
| Sweetened drinks, under 5g sugar/sweetener per 100ml, or artificially sweetened only | AED 0 per litre | Fixed volumetric charge, not price-linked |
The sweetened-drinks tier took effect on 1 January 2026 under Cabinet Decision No. 197 of 2025, replacing a flat percentage rate with a volumetric model tied to measured sugar content. This is a fundamentally different calculation: it is AED per litre of product, not a percentage of price, so the retail price and the Standard Price List play no role here. If a product fits more than one excise category at once, the higher applicable rate governs.
The Calculation Formula, Step by Step
For the ad valorem categories (50% and 100% goods), the declared retail selling price is treated as tax-inclusive. That means you cannot simply multiply the retail price by the rate, you first have to strip the excise tax back out of the price before applying the rate to it. The formula is:
Excise Price = Retail Price (excl. VAT) ÷ (1 + Rate)
Excise Tax Due = Excise Price × Rate
Run the arithmetic through and two shortcuts fall out, and most tax teams work from these directly:
- 50% goods: Excise Tax Due = Retail Price ÷ 3
- 100% goods: Excise Tax Due = Retail Price ÷ 2
Remember to compare the resulting excise price against the FTA Standard Price List figure before finalizing the number. If the Standard Price List figure is higher than your declared retail price, recalculate using the Standard Price List figure instead.
Worked Examples
These figures are illustrative, built to show the mechanics, not quotes from a specific FTA publication.
| Product | Declared Retail Price (excl. VAT) | FTA Standard Price | Excise Price Used | Rate | Excise Tax Due |
|---|---|---|---|---|---|
| Carbonated soft drink, 330ml can | AED 3.00 | AED 2.50 | AED 3.00 (retail is higher) | 50% | AED 1.00 |
| Cigarette pack, 20 units | AED 18.00 | AED 20.00 | AED 20.00 (FTA list is higher) | 100% | AED 10.00 |
| Energy drink, 250ml can | AED 6.00 | AED 6.50 | AED 6.50 (FTA list is higher) | 100% | AED 3.25 |
For the sweetened-drinks tier, the calculation drops price entirely and works off volume and lab-tested sugar content. A 500ml bottle carrying 9 grams of sugar per 100ml falls in the top tier (8g or more), taxed at AED 1.09 per litre:
Excise Tax Due = 0.5 litre × AED 1.09 = AED 0.545
The same 500ml bottle reformulated to 4 grams of sugar per 100ml drops into the zero-rate tier: Excise Tax Due = AED 0. That single reformulation decision, cutting sugar content below the 5-gram threshold, is the entire tax planning lever available on this category.
Where This Fits in Your Excise Tax Obligations
Calculating the correct excise price and rate is only the first step. That figure is what gets reported on your monthly return, a process covered in how to file and pay excise tax returns. Whether your business is even the party responsible for the calculation, importer, producer, or stockpiler, depends on the liability rules in who is liable for excise tax. Tax already paid on goods later exported is a recovery question, not a calculation one, covered in claiming excise tax refunds. Businesses holding stock when a rate changes should also review the excise tax payment and stockpiling rules.
Frequently Asked Questions
What is the FTA Standard Price List?
It is a schedule the Federal Tax Authority publishes and updates listing the median or standard retail selling price the FTA has determined for specific excise brands and products in the UAE market. It exists as a floor, so a business cannot under-declare a retail price to reduce the tax base.
What happens if my product is not on the Standard Price List yet?
Use your declared retail selling price, excluding VAT, until the FTA adds the product to its published list. Once listed, compare both figures each period and use whichever is higher.
Is VAT included when calculating the excise price?
No. The retail price used must exclude VAT. Excise tax is calculated first, and VAT is then charged on top of the VAT-exclusive price, effectively taxing the excise amount as well.
Why divide by 3 for a 50% rate and by 2 for a 100% rate instead of just multiplying by the rate?
Because the retail price already includes the excise tax within it. Multiplying it directly by the rate would overstate the tax. Stripping the tax out first simplifies to dividing by 3 for 50% goods and by 2 for 100% goods.
Do the sweetened-drinks volumetric rates apply to energy drinks too?
No. Energy drinks stay taxed at the standard 100% rate on the excise price, calculated the same way as tobacco products. Only sweetened drinks use the sugar-content-based per-litre model.
How often does the FTA update the Standard Price List?
Periodically, as new products enter the market or pricing shifts. Check the current published list on EmaraTax before finalizing each return period’s calculation rather than relying on a prior figure.
Tax Consultant Dubai
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How Tax Consultant Dubai Can Help
Getting the excise price wrong or missing a Standard Price List update is a common source of underpaid excise tax and FTA penalties. Our excise tax consultants verify the correct excise price and rate for every SKU and support your ongoing excise tax return filing so your return matches what the FTA expects.
Contact Tax Consultant Dubai today to get your excise tax calculations reviewed before your next filing deadline.
