Initial estimates in the UAE expected that implementing the selective tax will generate up to AED7 billion (USD1.9 billion) revenues annually to the federal budget, while a financial official said that it will probably be applicable starting October 1.
The selective tax will be imposed on selective goods that are consumed inside the country, even if they are in a free zone or at airports, said Younis al-Khouri, undersecretary at the Ministry of Finance.
“Commodities carried away out of the country by outbound travelers shall not be impacted by the tax, while those carried into the country shall be subject to the new law,” he added.
According to the Emirates News Agency (WAM), Khouri said that the selective tax on tobacco and energy drinks will be imposed at 100 percent, while soft drinks will carry a 50 percent tax.
This tax is an indirect tax borne by the final consumer that is imposed on goods that are harmful to public health, environment or luxury goods in varying proportions and according to the executive regulations.
The decree-law stipulates that the UAE cabinet, upon the recommendation of the Minister of Finance, determines the tax value on the excise goods, along with the method of calculating the excise price, provided that the tax rates do not exceed 200 percent of the excise price.
Sheikh Hamdan Bin Rashid Al Maktoum, Deputy Ruler of Dubai, Minister of Finance and Board Director of Federal Tax Authority said that UAE is in pursuit to accelerate the building of a safe and healthy society, through reducing consumption of goods that harm people and impact the environment’s quality.