Disruption coming to F&B logistics as UAE cabinet expands excise taxable products

WAM said the decision also requires manufacturers to clearly identify the sugar content in order for consumers to make "sensible healthy choices".
UAE Cabinet, Excise tax, Supply Chain, F&B

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The UAE Cabinet on Tuesday announced a decision to expand the list of excise taxable products to include sweetened beverages, sugary drinks and electronic smoking devices, starting from January 1, 2020.

The decision to add a tax of 50 percent is part of efforts to reduce consumption of unhealthy goods and modify consumers’ behaviour, state news agency WAM reported.

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A statement released by the Cabinet General Secretariat read: "The decision comes to support the UAE government's efforts to enhance public health and prevent chronic diseases directly linked to sugar and tobacco consumption.

"A tax of 50 percent will be levied on any product with added sugar or other sweeteners, whether in form of a beverage, liquid, concentrate, powders, extracts or any product that may be converted into a drink," it added.

WAM said the decision also requires manufacturers to clearly identify the sugar content in order for consumers to make "sensible healthy choices".

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The statement also said that a tax of 100 percent will be levied on electronic smoking devices, whether or not they contain nicotine or tobacco, as well as the liquids used in electronic smoking devices.

"The decision aims at reducing the consumption of harmful products that put the health of people and environment at risk," the statement added.

In 2017, the UAE Government started introducing excise tax on specific goods, which are typically harmful to human health or the environment.

These excise taxes typically cause a short-term disruption to supply chains in the UAE. In 2017 when the tax on cigarettes was introduced, shops across the country ran out of most brands, leading to bulk purchasing that further exasperated the shortages for several weeks. 

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