UAE Tax VAT Excise tax: practice questions with answers

Question 1

Nujoom Beverages LLC imports a canned drink that it markets and sells to UAE supermarkets as an energy drink. It contains caffeine and taurine and 11 g of sugar per 100 ml, and it meets the definition of an energy drink in Cabinet Decision No. 197 of 2025. How is this drink treated for UAE excise tax from 1 January 2026?

1. A Excise tax at AED 1.09 per litre, as a sweetened drink in the high-sugar tier
2. B Excise tax at 100% of its excise price plus AED 1.09 per litre for the sugar
3. C Excise tax at 100% of its excise price, as an energy drink
4. D Excise tax at 50% of its excise price, as a sweetened drink

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Answer: C. Cabinet Decision No. 197 of 2025 (from 1 January 2026) keeps energy drinks among the goods taxed at 100% of the excise price, together with tobacco products, electronic smoking devices and tools, and the liquids used in them. The tiered per-litre model (AED 1.09 per litre at 8 g or more of sugar per 100 ml, nil below 5 g) applies to sweetened drinks; the FTA's guidance on the tiered model (Public Clarification EXTP012) lists energy drinks among the products outside it, remaining at 100%. The sugar content therefore does not change the treatment: excise = 100% of the excise price.

Question 2

Sumood Tobacco Trading LLC imports cigarettes from abroad into excise Designated Zone 1. It then moves them, under the FTA's controls, to excise Designated Zone 2 for storage. In November 2026 it releases half of the cigarettes from Zone 2 into the UAE mainland; the rest stay in Zone 2. When does excise tax arise?

1. A Only on the cigarettes released into the mainland, on the date of their release
2. B On all the cigarettes when they first arrived in Designated Zone 1
3. C On all the cigarettes when they were moved from Zone 1 to Zone 2
4. D Never, because the cigarettes entered the UAE through a Designated Zone

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Answer: A. An excise Designated Zone meeting the conditions is treated as outside the State (Article 13, Federal Decree-Law No. 7 of 2017 on Excise Tax), and excise goods can be transferred between Designated Zones without tax becoming due, subject to the FTA's controls (Article 14). Tax arises when goods are released from the zone into the State (Article 2), so in November 2026 excise is due only on the half released into the mainland; the goods still in Zone 2 remain suspended.

Question 3

Samha Valley Tobacco LLC imports 2,500 packs of 20 low-priced cigarettes on 14 September 2026. The designated retail sales price is AED 14.70 per pack including 5% VAT and the FTA standard price list shows AED 6.80 per pack. From 1 September 2026 the minimum excise price for cigarettes is AED 0.40 per cigarette (Cabinet Decision 137/2026). The excise rate is 100%. What excise tax is due?

1. A AED 17,000
2. B AED 17,500
3. C AED 18,375
4. D AED 20,000

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Answer: D. - VAT-exclusive retail price = 14.70 / 1.05 = AED 14.00; less half for the excise included = AED 7.00
- Standard price = AED 6.80
- Minimum excise price (Cabinet Decision 137/2026, from 1 September 2026) = 20 x AED 0.40 = AED 8.00

The excise price cannot be below the minimum, so it is AED 8.00 per pack (Cabinet Decision 197/2025 read with Cabinet Decision 137/2026).

Excise tax = 100% x 8.00 x 2,500 = AED 20,000

Question 4

Marina Smoke-Free Devices LLC imports 400 refillable electronic smoking devices (sold without any liquid) in November 2026. The designated retail sales price is AED 157.50 per device including 5% VAT and no FTA standard price applies. Electronic smoking devices and tools are taxed at 100%. What excise tax is due on the import?

1. A AED 60,000
2. B AED 31,500
3. C AED 30,000
4. D Nil, because only the liquids, not the devices, are excise goods

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Answer: C. Electronic smoking devices and tools are 100% excise goods (Cabinet Decision 197/2025). With no standard price, the excise price is the designated retail sales price less the tax included in it:

- VAT-exclusive price = 157.50 / 1.05 = AED 150.00
- Excise price = half = AED 75.00

Excise tax = 100% x 75.00 x 400 = AED 30,000. The minimum excise prices in Cabinet Decision 137/2026 cover cigarettes, water-pipe tobacco and e-liquids, not devices.

Question 5

Jumeira Leaf Imports LLC, an excise registrant, reviews four items before filing its excise return. Which ONE may it deduct?

1. A Excise it paid on cigarettes that it later exported to a buyer outside the GCC, holding export evidence
2. B Excise it paid on cigarettes sold to a UAE retailer that has gone into liquidation without paying
3. C Excise on cigarettes it handed out free of charge as samples at a UAE trade fair
4. D Input VAT it paid on warehouse rent for the month

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Answer: A. Deductible excise tax is limited to the cases in Article 16 of Federal Decree-Law No. 7 of 2017 on Excise Tax: tax paid on excise goods later exported, tax paid on excise goods that become a component of another taxed excise good, tax on unsold goods where the rate falls, and other cases set by the FTA. Customer default and free samples consumed in the UAE are not among them, and VAT is a separate tax recovered in the VAT return.

Question 6

In November 2026 Tuffah Juice Factory LLC releases for consumption 30,000 bottles of 500 ml of an apple and mango drink with added sugar. An approved laboratory certificate shows 10 g of sugar per 100 ml. The designated retail sales price is AED 3.15 per bottle including VAT, and no FTA standard price applies. What excise tax is due on these bottles?

1. A AED 32,700
2. B AED 16,350
3. C AED 30,000
4. D AED 45,000

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Answer: B. Cabinet Decision No. 197 of 2025 replaced the 50% price-based rate for sweetened drinks with a volume-based model from 1 January 2026. A drink with 8 g or more of sugar per 100 ml is taxed at AED 1.09 per litre; the retail price is irrelevant.

1. Volume = 30,000 × 0.5 litres = 15,000 litres.
2. Excise tax = 15,000 × AED 1.09 = AED 16,350.