Starting September 1, a new minimum excise value for electronic cigarette liquids has been implemented across the United Arab Emirates, altering how excise tax is calculated for lower-priced e-liquids. The change mandates that every qualifying e-liquid now carries a minimum excise value of 1 dirham per milliliter, regardless of any previously lower taxable valuation.

The UAE’s excise tax rate on e-liquids remains unchanged at 100 percent. The adjustment focuses solely on establishing a minimum taxable base, preventing the excise tax from being calculated on values below the set threshold. This measure directly affects importers, manufacturers, and other businesses involved in the supply of e-liquids when their products’ assessed excise value was previously below 1 dirham per milliliter.

Importantly, the new minimum excise value does not equate to a mandated minimum retail price. Retailers are not required to charge customers more because of this adjustment. The final sale prices will depend on various factors including the product’s prior excise valuation and how businesses choose to manage any resulting tax cost. For products already taxed at or above the new minimum value, no immediate change in tax burden is expected. However, products previously valued below 1 dirham per milliliter will face a higher tax base.

Businesses in the sector may respond differently to the revised excise value. Some may absorb the extra cost, while others might pass it along the supply chain or adjust their prices accordingly. The Ministry of Finance has not mandated a uniform increase in retail pricing, so consumers could observe varying price impacts across different products and outlets.

Under the excise tax regime, companies importing, producing, or releasing excisable goods within designated zones must ensure compliance with registration, reporting, and payment requirements as stipulated by the UAE’s Federal Tax Authority. This update forms part of ongoing efforts to regulate the e-cigarette market while maintaining existing tax rates, focusing on enhancing the excise tax structure’s effectiveness and ensuring appropriate revenue collection.