Pay more for cigarettes and soda from Sunday

soft drink soda stock image

Need a good reason to quit smoking and energy drinks? As well as being bad for your health, from Sunday they will be harder on your pocket too.

From 1st October, the UAE’s new Federal Tax Authority (FTA) will start imposing tax on tobacco products, energy drinks and soft drinks that could see some products double in price.

Younis Haji Al Khouri, the Undersecretary of the Ministry of Finance, confirmed the date to the government news agency WAM.

Excise tax – an inland tax on the sale of specific goods (aka it’s not a customs duty)  – will be added to cigarettes and energy drinks at the rate of 100 per cent and carbonated drinks at 50 per cent.

So if you’re paying AED 10 for a packet of 10 cigarettes now, that’s going to rise to AED 20, while a 500ml bottle of Coca Cola should go up from AED 2 to AED 3.

The country will also begin to implement five per cent value added tax (VAT) on goods and services from 1st January, the UAE’s Ministry of Finance has previously confirmed

Deputy Ruler of Dubai and Minister of Finance, His Highness Sheikh Hamdan bin Rashid Al Maktoum said that VAT was “a significant role in achieving economic diversification in preparation for the post-oil.”

What does this mean for prices? Well, excise taxes are usually an indirect tax that isn’t paid directly by the consumer. Instead they are levied on the merchant, who typically passes it on to shoppers in retail prices.

Could this new legislation cut rising rates of obesity and diabetes in the emirates? Let’s hope so.

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