UAE tax to double tobacco, energy drink prices

'Prices of other types of soft drinks will increase by 50 percent,' said Bustani

DUBAI: Tobacco and energy drink prices are set to double in the United Arab Emirates, which is imposing steep excise taxes to help ease a budget shortfall caused by low oil prices.

Khaled al-Bustani, director general of the newly established UAE Federal Tax Authority, said on Wednesday that the 100-percent tax would be introduced from October 1.

Prices of other types of soft drinks will increase by 50 percent, Bustani told a press conference. He declined to say how much the UAE will raise from the tax.

The decision stems from agreements reached by the six-nation Gulf Cooperation Council to raise the prices of those products, then impose a long-awaited value-added tax (VAT) from the start of next year.



The GCC states -- Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates -- have been hit hard by a slump in oil revenues, which make up the bulk of their national income.

Saudi Arabia, which is forecast to post a large budget deficit in 2017 for the fourth year in a row, has already started imposing the excise tax, besides levying heavy residency fees for expatriates' dependents.

The kingdom, as well as UAE and Qatar, announced it would start collecting VAT of five percent at the beginning of next year on most products and services. Other members have not given a specific date.

The GCC states, which pump around 17 million barrels per day of crude oil, have seen their revenues plummet since the collapse of oil prices in mid-2014.