The UAE Cabinet has fixed a new minimum excise price of AED 1 per millilitre for liquids used in electronic smoking devices, effective 1 September 2026. The change comes under Cabinet Decision No. 137 of 2026, issued 24 July 2026, and it does not raise the underlying 100% excise tax rate – it sets a price floor that excise-registered businesses must use when that floor is higher than the actual declared price.
For tax and finance teams at businesses that import, produce, stockpile, or sell tobacco and vaping products, this is a compliance date to plan around, not just a headline to note. Here is what the decision actually changes, what stays the same, and what registered businesses should do before it takes effect.
What Cabinet Decision No. 137 of 2026 Introduces
The decision was issued pursuant to Federal Decree-Law No. 7 of 2017 on Excise Tax and Cabinet Decision No. 197 of 2025, which govern how the Excise Price is calculated across all excise goods. Article 2 of the new decision sets three minimum excise prices, none of which can be undercut regardless of a product’s actual declared or shelf price:
Product Category | Minimum Excise Price | Status |
|---|---|---|
Cigarettes (normal or electrically-heated) | AED 0.40 per cigarette | Unchanged |
Water pipe (shisha) tobacco, ready-to-use tobacco and similar products | AED 0.10 per gram | Unchanged |
Liquids used in electronic smoking devices and tools | AED 1.00 per millilitre | New |
The cigarette and water pipe tobacco floors carry over the rates that were already in force. The genuinely new element is the AED 1 per ml floor on vape liquids – a category that previously had no dedicated minimum price under the tobacco pricing decision.
Why a Minimum Price, Not a Higher Tax Rate
It is worth being precise about what actually changed, because several early news reports blurred the distinction. The excise tax rate on tobacco products, electronic smoking devices and vape liquids stays at 100%, as set out in Cabinet Decision No. 197 of 2025. What Cabinet Decision No. 137 of 2026 changes is the base that the 100% rate is applied to.
Under the UAE’s excise framework, the Excise Price used to calculate tax is generally the higher of two figures: the price declared by the manufacturer or importer, or the applicable minimum excise price set by the Cabinet. Before this decision, vape liquids had no dedicated floor, so heavily discounted or under-declared e-liquids could be taxed on an artificially low base. A 10ml bottle sold at a token price, for example, could previously generate very little excise tax even though the product itself was fully taxable.
From 1 September 2026, that gap closes. A 10ml bottle of e-liquid will carry a minimum Excise Price of AED 10, and a 30ml bottle a minimum of AED 30, regardless of the price printed on the shelf. If the manufacturer’s or importer’s declared price works out higher than the AED 1/ml floor, the higher of the two figures still applies – the floor only bites when the declared price would otherwise fall below it.
Who This Affects
The decision applies to any business already registered, or required to register, for UAE excise tax in relation to tobacco products or electronic smoking liquids. In practice, that includes:
- Importers of vape liquids, tobacco products and electronic smoking devices
- Local manufacturers and producers of e-liquids
- Warehouse keepers holding excise goods in a Designated Zone
- Distributors and stockpilers who hold excise goods for a taxable supply
- Retailers who source and price e-liquids for the UAE market
Consumers will feel the effect indirectly. Budget e-liquids that were previously priced, and therefore taxed, below the AED 1/ml equivalent will see their tax burden – and likely their shelf price – rise once the floor applies from September.
What Is Not Changing
Article 3 of the decision repeals Cabinet Decision No. 55 of 2019, the earlier instrument that set minimum excise prices for tobacco products, along with any provision that conflicts with the new rules. That repeal is a housekeeping step rather than a substantive change: the cigarette and water pipe tobacco minimums it previously set are restated, unchanged, in the new decision.
Two other things stay the same. First, the 100% excise tax rate on tobacco, vape liquids and electronic smoking devices, as fixed under Cabinet Decision No. 197 of 2025, is untouched. Second, the AED 1/ml floor applies specifically to liquids – the decision does not extend a new minimum price to electronic smoking devices, coils, pods or other hardware, which continue to be priced and taxed under the general excise rules.
Compliance Steps Before 1 September 2026
Businesses handling tobacco products or vape liquids should treat the run-up to September as a pricing and systems review, not a wait-and-see date. A practical checklist:
- Re-price affected SKUs. Identify any e-liquid product line whose current declared price, per millilitre, sits below AED 1. These are the products where the new floor will change the tax base.
- Update ERP and POS tax logic. Excise price calculations built into inventory or point-of-sale systems need the new AED 1/ml floor added as a rule, not just a manual adjustment at filing time.
- Review supplier and import declarations. Importers should confirm that customs and excise declarations submitted from 1 September reflect the new minimum, particularly for bulk or multi-pack liquid products.
- Check registration status. Any business selling e-liquids that has not yet registered for excise tax with the Federal Tax Authority should do so before its first taxable transaction – the minimum price rule applies regardless of registration status, so unregistered trading does not avoid the exposure.
- Brief finance and retail teams. Frontline pricing decisions and excise tax filings both need to reflect the same floor, so retail and tax teams should be working from the same reference table.
Because the Excise Price also feeds into how much input tax and VAT calculations interact for these goods, a mid-year change like this is worth a full pricing and filing review rather than a single-line update.
Frequently Asked Questions
What is the new minimum excise price for vape liquids in the UAE?
AED 1 per millilitre, effective 1 September 2026, under Cabinet Decision No. 137 of 2026.
Does this increase the excise tax rate on tobacco and vaping products?
No. The 100% excise tax rate under Cabinet Decision No. 197 of 2025 is unchanged. The new decision only sets the minimum price the tax is calculated on.
Have the minimum excise prices for cigarettes and shisha tobacco changed?
No. Cigarettes remain at a minimum of AED 0.40 each, and water pipe tobacco and similar products remain at AED 0.10 per gram.
Does the AED 1 per ml minimum apply to vape devices, coils or hardware?
No. The decision applies specifically to liquids used in electronic smoking devices and tools. Devices and accessories continue to be taxed under the general excise rules.
When does Cabinet Decision No. 137 of 2026 take effect?
1 September 2026. It was issued on 24 July 2026 and will be published in the Official Gazette.
What happens to Cabinet Decision No. 55 of 2019?
It is repealed by Article 3 of the new decision, along with any provisions that conflict with it. Its tobacco minimums are carried forward unchanged in the new decision.
How is the Excise Price actually calculated?
Per Cabinet Decision No. 197 of 2025, it is generally the higher of the price declared by the producer or importer and the applicable minimum excise price. From September, that comparison for vape liquids will include the new AED 1/ml floor.
Conclusion
Cabinet Decision No. 137 of 2026 is a narrow but consequential change: it does not touch the excise tax rate, but it closes a pricing gap that allowed some e-liquid products to be taxed on a very low base. Businesses trading in tobacco or vape products have a five-week window from the decision’s issue date to the 1 September 2026 effective date to re-price affected products, update tax calculation logic, and confirm their excise registration is in order.
Get Excise Tax Compliance Support
If your business imports, produces or sells tobacco products or e-liquids in the UAE, it is worth having your excise price calculations and registration status reviewed before the new minimum takes effect. NR Doshi & Partners‘ tax advisory team can review your product pricing against the new floor and help align your excise tax filings ahead of 1 September 2026.
Author:
This article is prepared by the Tax Advisory team at NR Doshi & Partners, an FTA-approved chartered accountancy and business advisory firm operating across the UAE since 1985 and a member of DFK International.
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