Cabinet Decision No. 137 of 2026 introduces a minimum Excise Price of AED 1 per millilitre for liquids used in electronic smoking devices and tools from 1 September 2026. The rule covers relevant liquids whether or not they contain nicotine.
The measure affects the value used to calculate UAE Excise Tax on electronic smoking liquids; it does not increase the existing 100% Excise Tax rate.
Importers, producers, businesses releasing Excise Goods from Designated Zones and businesses that may qualify as Stockpilers should assess how the new valuation requirement affects their products and transition position.
This article outlines the scope of the new rule, how the Excise Price is calculated, which businesses may be affected and the key records that support the applicable treatment.
What Cabinet Decision No. 137 of 2026 Changes
Cabinet Decision No. 137 of 2026 introduces a minimum valuation threshold for electronic smoking liquids. From 1 September 2026, the Excise Price calculated under the existing UAE rules cannot fall below the amount determined by applying AED 1 to each millilitre of liquid.
The minimum operates within the existing Excise Tax valuation framework. It does not replace the wider valuation rules and should not be confused with a mandatory retail selling price.
Which Electronic Smoking Liquids Are Covered?
The rule applies to liquids used in electronic smoking devices and tools and the like, subject to the applicable customs classifications.
Cabinet Decision No. 197 of 2025 expressly includes these liquids whether or not they contain nicotine.
These products are also commonly referred to as e-liquids or vape liquids, although UAE legislation uses the formal terminology relating to liquids used in electronic smoking devices and tools.
Legal scope depends on the relevant product category and customs classification. The Federal Tax Authority may require supporting documents, laboratory testing or other evidence to establish the correct Excise Goods classification.
Businesses should therefore confirm that:
- the liquid falls within the relevant electronic smoking product category; and
- its customs classification supports the Excise Tax treatment applied.
Nicotine-free liquids are not automatically outside the scope of Excise Tax.
Electronic smoking devices and tools are separately classified as Excise Goods. The new minimum under Cabinet Decision No. 137 of 2026 applies specifically to the liquid category.
How UAE Excise Tax on Electronic Smoking Liquids Is Calculated
The minimum Excise Price is a tax valuation requirement, not a prescribed consumer selling price.
Under the existing UAE Excise Tax framework, the Excise Price for percentage-based Excise Goods is generally determined by reference to the higher of:
- the price specified by the Federal Tax Authority in its standard price list, where available; or
- the designated retail sales price after removing the Excise Tax included in that price.
The designated retail sales price is determined separately and generally reflects the higher of the recommended retail selling price and the average retail selling price in the market, after deducting VAT.
For UAE Excise Tax on electronic smoking liquids, the new requirement places a volumetric floor beneath the existing valuation calculation.
For example, for a 60 ml bottle:
60 ml × AED 1 = AED 60
AED 60 is the minimum Excise Price. If this is the applicable Excise Price after comparing it with the value determined under the existing rules, the Excise Tax would also be AED 60 at the 100% rate.
If the existing valuation rules produce a higher Excise Price, the 100% rate applies to that higher amount.
Which Businesses Are Affected?
Excise Tax responsibility depends on the activity performed rather than simply on whether a business sells electronic smoking liquids.
Importers
Importers should confirm that the classification, liquid volume and Excise Price applied to affected products support the new valuation requirement.
Where products are imported in different bottle sizes, the actual liquid volume of each version should support the relevant valuation.
Producers and Manufacturers
UAE producers should review the Excise Price applied when affected goods are released for consumption.
Products manufactured in different volumes should be identifiable at product level so that the appropriate valuation can be supported.
Businesses Releasing Goods from Designated Zones
Release of Excise Goods from a Designated Zone can create an Excise Tax obligation.
The quantity and value reported on release should be supported by the related product, warehouse and declaration information.
Stockpilers
Businesses holding affected stock around the implementation date should assess whether the UAE Stockpiler rules apply to their inventory position. Holding stock does not automatically create additional Excise Tax liability.
The position depends on the applicable Stockpiler conditions, the Excise Price previously applied and the business’s actual inventory at the transition date.
Previous FTA guidance on minimum-price changes indicates that Stockpiler implications can arise where a higher minimum Excise Price increases the tax obligation.
Any treatment of transition stock should therefore be assessed against the applicable legislation and current FTA guidance.
Distributors and Retailers
Retail or distribution activity alone does not generally create a second Excise Tax liability where Excise Tax has already been accounted for on the goods.
Commercial effects may still arise through supplier costs, inventory values, retail prices and margins.
Separate Excise Tax obligations may apply where the same business also imports, produces, qualifies as a Stockpiler or releases Excise Goods from a Designated Zone.
Records Businesses Should Review
The following areas provide practical controls for businesses applying the new requirement. They are not additional procedures expressly prescribed by Cabinet Decision No. 137 of 2026.
Product, Registration and Pricing Data
Affected product records should identify the information required to support the applicable valuation, including:
- product description and code;
- liquid volume;
- product classification;
- recommended retail selling price;
- current Excise Price; and
- relevant Excise Goods registration information.
Where products are supplied in different volumes, each version should be separately identifiable.
Where registered product information has changed, internal records should be checked against the information maintained with the FTA and the applicable amendment process followed where required.
Changing an internal product master or ERP record does not by itself amend information held by the Authority.
Transition Inventory
Businesses holding affected products around implementation should establish a clear stock position.
Relevant information may include:
- SKU and quantity;
- liquid volume;
- stock location;
- Excise Price previously applied; and
- prior Excise Tax treatment.
Goods held within a Designated Zone should be distinguishable from products already released for UAE consumption.
This information also provides the factual basis for assessing whether the Stockpiler rules are relevant.
Accounting, ERP and Reconciliation
As a practical control, accounting and ERP systems should be capable of supporting the product volume and Excise Price used in the tax calculation.
Businesses may also need to reconcile product data, inventory quantities and declaration records where those systems are used to prepare Excise Tax reporting.
The purpose is not to create an additional statutory process. It is to ensure that the reported quantity and Excise Price can be traced to the records supporting the calculation.
Conclusion
The new rule introduces a minimum valuation requirement for UAE Excise Tax on electronic smoking liquids while leaving the existing 100% Excise Tax rate unchanged.
Businesses involved in relevant Excise Tax activities should assess affected products by liquid volume and applicable Excise Price and maintain records supporting the treatment applied.
Transition stock requires particular attention where the Stockpiler provisions may be relevant.
About SimplySolved
As an FTA Approved Tax Agency with ISO 9001, ISO 27001 and ISO 42001 certifications, SimplySolved provides UAE tax advisory, accounting and compliance support for businesses.
SimplySolved supports businesses with Excise Tax assessments, tax reporting and reviews of product, inventory and financial records to help identify whether existing tax treatment and supporting data align with applicable UAE requirements.
This article is provided for general informational purposes only and should not be relied upon as binding tax, legal, accounting or financial advice. Professional advice should be obtained based on the specific circumstances of the business and UAE legislation in force at the relevant time.
