UAE to implement excise tax from October 1

Dubai: The UAE Excise Tax Law is set to come into effect from October 1, the Director-General of the Federal Tax Authority (FTA) said on Wednesday.

The move aims to "propel the United Arab Emirates to the highest ranks on global competitiveness indicators", Khalid Ali Al-Bustani said in a media briefing.

The excise tax will be imposed on carbonated drinks by 50 per cent. The new tax will also be levied on tobacco products and energy drinks by 100 per cent, the Khaleej Times reported.

The tax affects specific "excise" goods that are produced in the UAE, imported into it or stockpiled in the Gulf state, a major oil supplier.

Al-Bustani said the excise tax had been adopted to reduce the consumption of goods that damage people's health.

The Gulf Arab states had introduced a number of taxes and special fees recently in order to partially mitigate the fall in oil revenues.

The price of the "black gold" fell from 110 US dollar per barrel in mid-2014 to 27 dollars in January 2016 before stabilising at around 50 dollars per barrel where it stands nowadays, Xinhua news agency reported.

The UAE needs a price of 67 dollars and above in order to reach fiscal break-even.

The six Gulf Arab states of Gulf Cooperation Council (GCC), the UAE, Saudi Arabia, Kuwait, Bahrain, Qatar and Oman, will jointly raise five per cent value-added tax for the first time from January 1, 2018.

At current oil prices, only the GCC member Kuwait generates a balanced budget, said the International Monetary Fund (IMF).

Due to spending cuts and with the implementation of taxes, the IMF said earlier this year, the GCC would achieve a current account surplus of 26 billion dollars in 2017 compared to a combined deficit of 28 billion dollars last year.