What the New Excise Pricing Rule Entails
On August 6, 2026, the UAE Ministry of Finance issued a decision (Cabinet Decision No. 137 of 2026) introducing a minimum excise price for liquids used in electronic smoking devices and tools. Also, this applies alongside existing minimums for cigarettes, shisha tobacco, and similar products. The new floor price is set at AED 1 per millilitre of liquid. The rule comes into force 1 September 2026. (mof.gov.ae)
Impacts include: manufacturers and importers must ensure prices meet or exceed the floor; retailers must not sell below; excise tax remains at 100% for all tobacco products including e-liquids. (mof.gov.ae)
Areas Affected and Key Compliance Requirements
Affected entities include:
- Manufacturers or importers of e-liquids for vaping/electronic smoking tools
- Retailers selling those e-liquids
- Distributors, wholesalers, and online marketplaces handling these products
They must:
- Label clearly: volume in mls, price per ml must be correctly calculated to meet minimum
- Maintain records of supply and pricing policies, invoices to show no underpricing
- Adjust financial models: cost-plus pricing, discounts, promotions must avoid pricing under the floor
Practical Example
A retailer imports a line of e-liquids of 10 ml bottles to sell at AED 9 per bottle. With the minimum excise set at AED 1/ml, the minimum excise-price for that bottle is AED 10. The retailer must either:
- increase the selling price to at least AED 10
- absorb cost adjustments to adjust margin
Strategic Responses & Challenges
- Review product portfolio: Some e-liquids may be loss-leaders under old pricing—reevaluate margins or pull unprofitable SKUs.
- Contract adjustments: renegotiate with suppliers to reduce cost per ml or secure discounts so margins are preserved.
- Compliance systems: set up checks so product pricing is validated for each shipment, especially for imports with variable shipping or customs charges.
- Avoiding misclassification: ensure that product classification codes match those used in the excise legislation. Misclassifications can lead to underpricing risk.
Longer-Term Considerations
- Categories may expand: new product types similar to e-liquids may be added
- Regulatory enforcement: inspections likely; penalties for non-compliance may include fines, seizure, or tax assessments
Author: NomadicTax Research Team
Read Time: ~5 min