The UAE is introducing a new minimum Excise Price of AED1 per millilitre for liquids used in electronic smoking devices from September 1, 2026. The Ministry of Finance has also extended Small Business Relief under the UAE Corporate Tax regime until December 31, 2029 for eligible businesses.
The changes matter to importers, manufacturers, distributors, retailers and small businesses, affecting tax calculations, compliance and financial planning.
- Location: UAE
- Organisation: UAE Ministry of Finance and Federal Tax Authority
- Status: New vape liquid excise pricing starts September 1, 2026
- Who is affected: E-smoking product businesses and eligible small businesses
- Business impact: Changes to taxable values and continued Corporate Tax relief
- What’s next: Businesses should review pricing, records and eligibility requirements
UAE businesses are preparing for a new tax-related change from September 1, 2026, when a minimum Excise Price of AED1 per millilitre will apply to liquids used in electronic smoking devices.
The UAE Ministry of Finance announced the measure earlier this month under Cabinet Decision No. 137 of 2026. While the new rule affects businesses dealing with vape and e-smoking liquids, another recent decision brings positive news for eligible smaller companies, with Small Business Relief extended until December 31, 2029.
Here is what businesses need to know about the latest UAE tax updates and what they could mean in practice.
What is changing for vape liquids in the UAE from September 1?
From September 1, 2026, the UAE will introduce a minimum Excise Price of AED1 per millilitre for liquids used in electronic smoking devices and tools.
The Ministry of Finance said the measure falls under Cabinet Decision No. 137 of 2026 and is designed to standardise the way excise calculations apply to these products.
It is important to note that this is not a new 100% Excise Tax rate. Electronic smoking liquids are already subject to Excise Tax under the UAE’s existing tax framework.
Instead, the new decision establishes a minimum value that must be considered when calculating the applicable excise price.
For example, a 60ml bottle of e-smoking liquid would have a minimum excise price base of AED60 under the AED1-per-ml rule. The applicable Excise Tax is then calculated according to the UAE’s existing rules.
The change could have a greater impact on lower-priced products where the current taxable value falls below the new minimum threshold.
Which UAE businesses could be affected?
The change is particularly relevant for businesses involved in importing, manufacturing, distributing and selling e-smoking liquids.
Companies may need to review how they calculate the taxable value of products before the September 1 deadline. Product pricing, inventory records and tax calculations may all require attention, especially for products currently priced below the new minimum excise value.
Retailers may also need to understand how the change affects existing stock and future pricing decisions.
The Ministry of Finance said the new approach is intended to strengthen compliance and support more consistent tax treatment across tobacco and electronic smoking products.
The Federal Tax Authority continues to oversee the UAE’s Excise Tax system, including compliance and registration requirements for businesses dealing with products covered by the tax.
For affected companies, the practical focus now is likely to be on ensuring internal records and tax systems are ready before the new minimum price takes effect.
UAE extends Small Business Relief until the end of 2029
Another important development for the business community came through Ministerial Decision No. 131 of 2026.
The Ministry of Finance has extended Small Business Relief for Corporate Tax purposes until December 31, 2029.
The relief is available to eligible taxable persons that meet the conditions set out in UAE Corporate Tax legislation. Under the current framework, businesses with revenue of AED3 million or less may be eligible for the relief, subject to the relevant requirements.
The extension covers eligible Tax Periods beginning on or after June 1, 2023, and ending on or before December 31, 2029.
For qualifying small businesses, the measure provides continued access to simplified Corporate Tax treatment and reduces some of the compliance burden associated with the UAE’s Corporate Tax system.
However, businesses should not assume they automatically qualify simply because their revenue is below AED3 million. Eligibility depends on meeting the conditions set out in the legislation, and companies should maintain accurate financial records to support their tax position.
What about the UAE’s audited financial statement rules?
Businesses should also be aware of an important distinction between the latest announcements and existing Corporate Tax requirements.
The UAE’s rules on audited financial statements are not a new tax change taking effect in October 2026.
The relevant framework is set out in Ministerial Decision No. 84 of 2025, which applies to Tax Periods commencing on or after January 1, 2025.
Under these rules, taxable persons that are not part of a Tax Group must prepare and maintain audited financial statements when their revenue exceeds AED50 million during the relevant Tax Period.
Qualifying Free Zone Persons are also required to prepare and maintain audited financial statements, regardless of whether they cross the AED50 million revenue threshold.
Tax Groups and certain businesses operating under specific Free Zone arrangements may have separate requirements based on their activities and tax status.
This distinction is important because businesses should avoid treating the audit rules as a completely new requirement starting in October 2026. Companies should instead review which rules already apply to their current or upcoming Tax Period.
Why these UAE tax changes matter?
For UAE residents, the immediate impact of the new excise rule is likely to be most visible within the e-smoking product market. Businesses may reassess product pricing and tax calculations once the AED1-per-ml minimum excise value comes into force.
For companies, the bigger picture is about compliance.
Importers, manufacturers and retailers dealing with e-smoking liquids need to prepare for the September 1 change. At the same time, eligible small businesses now have greater certainty about the continuation of Small Business Relief until the end of 2029.
The extension could particularly benefit smaller companies and entrepreneurs that continue to meet the eligibility requirements, giving them more time under the relief framework while they manage their Corporate Tax obligations.
The next step for affected businesses is to review their revenue, product records, tax calculations and eligibility status before the relevant deadlines.
FAQs
When does the new UAE vape liquid excise price start?
The new minimum Excise Price of AED1 per millilitre for liquids used in electronic smoking devices takes effect on September 1, 2026.
Is the UAE introducing a new 100% tax on vape liquids?
No. Electronic smoking liquids are already subject to the UAE’s existing 100% Excise Tax rate. The September change introduces a new minimum excise price of AED1 per millilitre.
Who can benefit from UAE Small Business Relief?
Eligible taxable persons with revenue of AED3 million or less may qualify, provided they meet the conditions set out under UAE Corporate Tax legislation.
Until when has Small Business Relief been extended?
The UAE Ministry of Finance has extended the relief for eligible Tax Periods ending on or before December 31, 2029.
Are audited financial statements a new requirement from October 2026?
No. The relevant audited financial statement rules under Ministerial Decision No. 84 of 2025 apply to Tax Periods commencing on or after January 1, 2025, depending on the business’s tax status and revenue.
The UAE’s latest tax updates bring two different developments for businesses. Companies dealing with e-smoking liquids need to prepare for the new AED1-per-ml minimum Excise Price from September 1, while eligible small businesses have been given a longer window to benefit from Corporate Tax relief until the end of 2029.
As always, businesses should review the latest Ministry of Finance and Federal Tax Authority requirements and ensure their records and tax calculations are up to date.
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