Businesses dealing in tobacco and electronic smoking products in the UAE should review their Excise Tax calculations ahead of 1 September 2026. The UAE has issued Cabinet Decision No. 137 of 2026 on the Excise Price for Tobacco Products and Liquids used in Electronic Smoking Devices and Tools. The Decision was issued on 24 July 2026 and will become effective from 1 September 2026. The key development is the introduction of prescribed minimum Excise Prices for cigarettes, water-pipe tobacco and liquids used in electronic smoking devices.
What are the new minimum Excise Prices?
Under the new Decision, the Excise Price continues to be determined in accordance with Article 11 of Cabinet Decision No. 197 of 2025. However, the calculated Excise Price cannot be lower than the following prescribed amounts:
These amounts represent the minimum Excise Price used for Excise Tax purposes. They should not be confused with a mandatory minimum retail selling price.
Cigarettes include electrically heated cigarettes
The Decision defines “Cigarettes” broadly to include: all cigarettes, whether normal or electrically heated. Businesses dealing with heated tobacco products should therefore consider the new minimum of AED 0.40 per cigarette when determining the applicable Excise Price.
For example, a pack containing 20 cigarettes would have a minimum Excise Price of:
20 cigarettes × AED 0.40 = AED 8
If the Excise Price determined under the applicable calculation rules is higher, the higher amount would remain relevant. The new Decision effectively establishes a floor below which the Excise Price cannot fall.
Vape liquids are covered even if they contain no nicotine
This is another important point. The Decision defines liquids used in electronic smoking devices and tools as all liquids used in such devices and similar tools, whether or not they contain nicotine. Therefore, the minimum Excise Price of AED 1 per ml is not limited only to nicotine-containing liquids.
For example, for a 30 ml vape liquid, the minimum Excise Price would be:
30 ml × AED 1 = AED 30
The fact that the liquid is nicotine-free does not, by itself, take it outside this definition.
What about water-pipe and other tobacco?
For Water Pipe Tobacco, ready-to-use tobacco and similar products, the minimum Excise Price is:
AED 0.10 per gram.
The Decision defines Water Pipe Tobacco as tobacco intended for smoking in a water pipe consisting of tobacco and glycerol, whether or not it contains aromatic oils or extracts, molasses or sugar, and whether or not it is fruit-flavoured.
For example, a 250-gram package would therefore have a minimum Excise Price of:
250 grams × AED 0.10 = AED 25
Again, this is the minimum Excise Price for tax purposes rather than necessarily the product’s selling price.
What should affected businesses do before 1 September 2026?
Businesses dealing with the affected products should consider reviewing:
- their existing Excise Price calculations;
- product master data;
- product quantities, including cigarette count, tobacco weight and liquid volume;
- Excise Tax systems and calculation logic; and
- whether existing product Excise Prices fall below the new prescribed minimums.
Importers and manufacturers in particular should ensure that their systems are capable of applying the new minimum values from the effective date.
Existing Cabinet Decision Repealed
Cabinet Decision No. 137 of 2026 repeals Cabinet Decision No. 55 of 2019 concerning the Excise Price for Tobacco Products, along with any provisions that are inconsistent with the new Decision.
Effective Date: 1 September 2026
Key Takeaway
The new rules establish a clear minimum Excise Price framework:
- AED 0.40 per cigarette
- AED 0.10 per gram of water-pipe/ready-to-use tobacco
- AED 1.00 per ml of electronic smoking liquid
For businesses operating in the UAE tobacco and electronic smoking sector, the immediate priority should be to review Excise Price calculations and product data before 1 September 2026. Importantly, the new minimum for electronic smoking liquids applies whether or not the liquid contains nicotine. RVG Chartered Accountants can assist businesses with UAE Excise Tax assessments, Excise Price reviews and related tax compliance.
