Introduction
In August 2026, the UAE introduced two significant policy changes impacting businesses of all sizes: a minimum excise price for liquids used in electronic smoking devices (effective 1 September 2026), and an extension of Small Business Relief under the corporate tax regime until 31 December 2029.(mof.gov.ae) This article breaks down what these changes mean for product pricing, compliance, and cash flow management.
Minimum Excise Price for E-Liquids
What changed
- A minimum excise price of AED 1 per milliliter was imposed for liquids used in electronic smoking/vaping devices, starting 1 September 2026.
- Minimum excise pricing already existed for cigarettes, hookah tobacco, etc.; this adds e-liquids to the scope.(mof.gov.ae)
Implications for retailers and manufacturers
- Pricing strategy: Products currently sold below this line must increase their prices or absorb extra cost.
- Labeling & packaging compliance: Update cost calculations, ensure excise tags or stamps (if required) meet new value bands.
- Supply chain assessment: Imported ingredients and manufacturing costs must be scrutinized; potential duty/excise base recalculation.
Small Business Relief Extended to End-2029
What is the relief?
Under UAE Corporate Tax rules, businesses with annual revenue up to AED 3 million qualify for Small Business Relief, which simplifies compliance obligations—lower reporting burdens and possible administrative exemptions.(mof.gov.ae)
What's new?
- The relief was previously time-limited; the new Ministerial Decision extends its availability through tax periods ending on or before 31 December 2029.
- Threshold and eligibility criteria (e.g. AED 3 million revenue) remain in force for periods from 1 June 2023 to 31 December 2029.(mof.gov.ae)
Action Steps for Businesses
- Review current excise-taxed product pricing: Particularly for e-liquids, understand your cost base and recalculate margins.
- Audit product lines: Are some SKUs selling under AED 1/ml? If yes, plan adjustments or phased discontinuations.
- Ensure excise returns and registration are up to date: If you're a new importer / manufacturer, establish compliance early.
- Leverage small business relief: If revenue is under AED 3 million, ensure your accounting/reporting is simplified as allowed; keep scrutiny over how relief may phase out after 2029.
- Plan for scalability: If you expect to exceed threshold, prepare for full corporate tax obligations ahead of time.
Example Situation
Suppose a UAE retailer sells a popular e-liquid at AED 0.85/ml. With the new rule (as of 1 September 2026), this product must be rebranded or repriced.
Similarly, a small café with AED 2.5 million revenue per year can continue under reduced compliance regime until end of 2029—but if 2028-29 revenue jumps over AED 3 million, full corporate tax compliance starts.
Broader Impact and Risks
- For manufacturers, raw input costs may rise as excise tax and administration increase.
- Small businesses will benefit from more certainty with the extension, but there’s potential “cliff effect” when revenue crosses threshold.
- Government collects more predictable excise revenues; public health may benefit from higher cost for e-liquids.
Key Takeaways
- From 1 September 2026, all e-liquids must be priced at least AED 1/ml for excise tax purposes.
- Small Business Relief in the UAE extends until 31 December 2029, with the AED 3 million revenue threshold remaining.
- Businesses should audit, adapt pricing, update compliance, and plan growth with these changes in mind.
- If unsure about your classification, product category, or compliance obligations, consult a tax professional early.