Last Updated on: 1st July 2023, 07:06 pm
All You Need To Know About Sin Tax UAE 2023
The United Arab Emirates (UAE) introduced a Sin Tax, also known as an excise tax, on tobacco, energy drinks, and soft drinks to promote public health and increase revenue. The tax came into effect on 1st October 2017. It is part of the government’s effort to diversify its revenue streams and reduce its reliance on oil revenues.
Sin Tax Benefits
The Sin Tax helps reduce the consumption of unhealthy products that can lead to various diseases, including obesity, diabetes, and heart disease. In addition, consumers in the United Arab Emirates are encouraged to switch to healthier alternatives such as water or juice.
It is currently generating massive revenue for the UAE which is used in other sectors such as health and education. According to the UAE’s Federal Revenue Authority (FTA), the sin tax generated AED2.48 billion in revenue in 2020, up from AED2.2 billion in 2019.
Sin Tax Disadvantages
Some argue that the sin tax is regressive because it unfairly hits low-income groups who don’t have access to healthier alternatives. Critics suspect the tax could lead to an increase in smuggling and illegal sales of taxed goods.
Sin Tax Rate
The rate of excise duty is as per Cabinet Order No. 52 of 2019 on Special Products, Special Tax Rates, and Special Pricing Techniques as follows:
| Goods | Sin Tax Rate |
| Carbonated Drinks | 50% |
| Tobacco Products | 100% |
| Energy Drinks | 100% |
| Electronic Smoking Devices | 100% |
| Liquids for Smoking Devices | 100% |
| Products with added sugar | 50% |
What’s Their Comparison With VAT?
The Sin Tax is different from Value Added Tax (VAT) in the United Arab Emirates, which was introduced on 1st January 2018. VAT is a general tax on goods and services, while sin tax only targets specific products due to their negative impact on health and society.
Other Countries With A Sin Tax
The United Arab Emirates is not the first country to introduce a sin tax. Several other countries, including the United States, Canada, and Australia, have introduced similar taxes with different conditions. The aim is to discourage the consumption of tobacco, alcohol, and sugary drinks.
Similarly, other Gulf Cooperation Council (GCC) countries also collect the Sin Tax under a different label. These include Saudi Arabia, Oman, Bahrain, and Qatar.
The UAE government has used the word “Sin” to discourage unhealthy products. With this term, the government wants to inform consumers that the products they buy have negative connotations. This approach should have a psychological impact on consumers, encouraging them to reconsider their choices and choose something healthy.
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