The UAE Ministry of State for Financial Affairs issued Ministerial Decision No. 1 of 2025 on 3 January 2025, revising the excise tax framework for electronic smoking devices.
This decision, effective from 3 January 2025, replaces Ministerial Decision No. 236 of 2019.
Under the new rules, the excise tax applies to all liquids used in electronic smoking devices, regardless of nicotine content. The regulation also mandates the use of Harmonized System (HS) codes from Chapter 24 of the GCC classification framework to ensure consistency.
Additionally, the decision extends excise tax to concentrates, powders, gels, and extracts that can be converted into taxable liquids by retailers. The excise price will be based on the higher of either the tax authority’s listed price or the “Designated Selling Price” declared by importers or producers. Retailers must maintain accurate pricing records to comply with tax regulations.
Separately, the Federal Tax Authority (FTA) has issued Decision No. 8 of 2024, effective 1 January 2025, outlining new requirements for correcting VAT return errors. Businesses must use voluntary disclosure to rectify misreported taxable supplies across emirates or incorrect classifications of zero-rated and exempt supplies, even if the total tax due remains unchanged.
