The UAE has introduced new minimum excise price rules for tobacco products and liquids used in electronic smoking devices. Under Cabinet Decision No. 137 of 2026, businesses must apply set minimum values when calculating excise tax on these products. The rules came into effect on 1 September 2026 and replace the previous Cabinet Decision No. 55 of 2019.
This update is important for businesses that import, manufacture, distribute or sell tobacco and electronic smoking products in the UAE. It sets minimum prices for different product categories and affects how businesses calculate their UAE Excise Tax.
What Has Changed Under the New Decision?
The new decision sets three minimum excise prices:
- AED 0.40 per cigarette stick
- AED 0.10 per gram of waterpipe tobacco, ready-to-use tobacco and similar products
- AED 1 per millilitre of liquid used in electronic smoking devices and tools
The AED 1 per millilitre rule is a key part of this update. It applies to e-liquids whether they contain nicotine or not. This means nicotine-free liquids are also covered by the new minimum price.
The excise price must be calculated under the method set out in Cabinet Decision No. 197 of 2025. However, it cannot be lower than the minimum amount set for the relevant product.
How Will the New E-Liquid Rule Work?
The new minimum price can affect the excise tax calculation for businesses selling or importing e-liquids at lower prices.
For example, consider a bottle containing 30ml of e-liquid. Under the new rule, its minimum excise price is AED 30. Since e-liquids are subject to a 100% excise tax rate, the tax on this minimum value would be AED 30.
If the value used to calculate excise tax under the applicable rules is higher than AED 30, the higher value will apply. Businesses should check each product’s price and liquid volume before calculating the tax due.
The rule also covers liquids without nicotine. Businesses cannot exclude these products from the minimum price calculation simply because they do not contain nicotine.
Do the New Rules Apply to Devices and Accessories?
Businesses must understand the difference between e-liquids and electronic smoking hardware.
The AED 1 per millilitre minimum applies to the liquid used in electronic smoking devices. It is not a per-unit minimum for devices, coils or other hardware accessories.
For pre-filled pods, businesses should identify the liquid volume separately from the hardware value. Correct product classification and financial record-keeping can help businesses apply the right excise calculation to each product.
What Should Affected Businesses Do Now?
Importers, manufacturers, distributors and retailers dealing in these products should review their current Excise Tax compliance processes. They should check product volumes, declared prices and inventory records to make sure the minimum prices are applied correctly.
Businesses should also review their accounting and bookkeeping records, tax calculations and reporting processes. If they continue using old calculations or report an excise price below the required minimum, they may understate the tax due. This can lead to tax shortfalls and compliance issues with the Federal Tax Authority.
It is also important to review internal controls and update relevant pricing and accounting procedures. Businesses should not apply the liquid price floor to every electronic smoking product. Each category must be assessed under the correct valuation rule.
How Dubai Business and Tax Advisors Can Help
Keeping up with UAE tax changes can be difficult for businesses that handle several excise product categories. Dubai Business and Tax Advisors (DBTA) provides support with UAE Excise Tax advisory, tax compliance, accounting and bookkeeping, and financial reporting.
DBTA’s ACCA-qualified team can help businesses review their tax calculations, assess their records and identify areas that may need attention. This support can help businesses maintain accurate financial information and manage their ongoing tax responsibilities.
The new rules have been in force since 1 September 2026. Businesses dealing in tobacco products and electronic smoking liquids should review their pricing, product records and tax calculations to ensure they follow the updated requirements.
