UAE sets minimum selective tax price for tobacco and e‑cigarette liquids
UAE Finance Ministry sets minimum selective tax price for tobacco and e-cigarette liquids at AED1/ml, effective 1 September 2026, strengthening tax compliance.
Ministry of Finance issues new minimum selective tax price decision
The Ministry of Finance announced a decision to adopt a minimum selective tax price covering tobacco products and e‑cigarette liquids across the UAE market.
The move establishes a minimum selective tax price of AED 1 per millilitre for liquids used in electronic smoking devices and confirms continued application of minimum pricing for traditional tobacco formats.
The decision is intended to standardise the application of selective tax rules and to support consistent enforcement across product categories.
It takes effect on 1 September 2026 and will apply to importers, manufacturers, distributors and retailers of excise goods subject to the selective tax regime.
Minimum price set at AED 1 per millilitre for e‑liquids
Under the new measure, liquids used in devices and tools for electronic smoking will carry a minimum selective tax price equal to AED 1 per millilitre.
This introduces a floor for e‑liquid pricing intended to prevent undervaluation that could undermine the objectives of the excise framework.
The requirement complements existing tax measures that already target conventional tobacco, aligning pricing rules across both combustible and electronic products.
By linking the minimum price to volume, authorities aim to make tax application more transparent and less susceptible to manipulation.
Existing minimums for cigarettes, shisha and ready‑to‑use tobacco retained
The Ministry confirmed the continued application of minimum selective price rules for cigarette rolls, shisha tobacco, ready‑to‑use tobacco and comparable products.
These categories remain subject to the longstanding selective tax framework that governs tobacco goods in the UAE.
Authorities emphasised that the expanded minimum price regime will apply uniformly, ensuring that all tobacco and related products meet the same baseline for selective tax calculations.
This preserves the 100% selective tax rate currently levied on tobacco products while adding a complementary price floor for certain electronic smoking consumables.
Implementation timeline and obligations for businesses
The measure is scheduled to enter into force on 1 September 2026, giving businesses a clear compliance deadline.
Importers and producers will need to adjust invoicing, pricing strategies and labeling to reflect the new minimum selective tax price ahead of that date.
Retailers should review stock valuation and point‑of‑sale pricing to ensure that sales of e‑liquids and other excise goods comply with the new floor.
The Ministry has indicated the move is part of an effort to enhance tax administration efficiency and reduce practices that can erode tax revenues.
Intended effects on compliance, revenue and market practices
Officials say the change will strengthen tax compliance by reducing incentives for underpricing and misclassification of excise goods.
A standardized minimum price is expected to simplify audit and verification processes for tax authorities while closing gaps exploited to avoid full selective tax burdens.
Observers note the policy could also influence consumer prices for e‑liquids and related products, depending on how producers and retailers adjust margins.
From a revenue perspective, the minimum selective tax price is designed to protect the integrity of the selective tax system and sustain anticipated excise receipts.
Enforcement mechanisms and regulatory oversight
The Ministry’s decision signals stepped‑up regulatory oversight over the excise market and its supply chains.
Authorities will rely on established customs and tax administration channels to monitor compliance and apply sanctions where necessary.
Businesses are likely to face administrative checks, documentation reviews and, where applicable, penalties for non‑compliance under UAE tax legislation.
The clear implementation date aims to provide a predictable transition and reduce disputes arising from sudden enforcement actions.
The Ministry framed the decision as an update to keep pace with developments in the market for taxed products and to ensure a level playing field for businesses operating in the UAE.
The UAE continues to levy a selective tax rate of 100% on all tobacco products covered by the excise system, and the newly introduced minimum selective tax price for e‑liquids is intended to reinforce the scope and effectiveness of that policy.