Unfair Gaps🇦🇪 UAE

Distilleries Business Guide

17Documented Cases
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All 17 Documented Cases

غرامات عدم الامتثال لنموذج الضريبة الانتقالية على المشروبات السكرية

LOGIC-estimated: AED 50,000–AED 500,000 per audit finding (based on UAE statutory penalty ranges of 25–100% of unpaid tax + base fines; typical for mid-sized beverage producers). For transition-period classification errors, expect 40–80 hours of remediation labor at AED 300–500/hour = AED 12,000–40,000 in indirect costs.

The Cabinet Decision No. 197 of 2025 mandates that sweetened drinks be taxed at AED 0.79/liter (5–8g sugar per 100ml) or AED 1.09/liter (8g+ per 100ml), replacing the flat 50% ad-valorem rate[3]. Non-compliance with new documentation and classification requirements exposes beverage producers to audit penalties under Federal Decree-Law No. 7 of 2017 (Article 3), which permits penalties up to 200% of unpaid tax[1]. The transition period (effective Sep 11, 2025 public notice, implementation Jan 1, 2026) creates a 16-week window where companies must audit all inventory and recalculate tax—manual errors are high-risk.

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رسوم عدم الامتثال للترخيص الكحولي (Alcohol Licensing Non-Compliance Penalties)

Imprisonment and/or fines (exact amounts not specified in law); License revocation (total business loss); Estimated compliance remediation: 100–200 AED/hour × 40–80 hours annually for manual documentation oversight

Article 363/2 of the revised Penal Code criminalizes unauthorized alcohol production and maintaining inadequate production records. Distilleries must maintain verifiable documentation of each production run (fermentation, distillation cuts, quality verification). Manual documentation systems create audit failures, leading to compliance violations.

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انتهاكات الترخيص والتوافق (Licensing & Compliance Violations)

AED 500,000 maximum statutory fine per incident; license revocation (total business loss); estimated 40-80 hours/month for manual verification documentation and audit preparation

Distilleries operating in UAE must maintain comprehensive records of blending and proofing verification to demonstrate compliance with product standards and alcohol regulations. The search results indicate that non-compliance with Dubai Liquor Control Law No. 7 of 2012 and federal regulations can result in significant penalties. Manual handling of verification documentation increases the risk of audit failures.

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خسارة الإيرادات بسبب عدم تصنيف المنتجات بشكل صحيح تحت النموذج الجديد

Quantified: AED 30,000–150,000 per annum (estimated for mid-sized distillery: ~5,000–10,000 liters/month of excise-taxable product × AED 0.79–1.09/L × 12 months = AED 47,000–130,000 base liability; misclassification error of ±5–15% = AED 2,350–19,500 annual leakage).

Products qualify for 0% excise tax if they contain ONLY artificial sweeteners (aspartame, sucralose, stevia) or ONLY natural sugar with no added sugar or other sweeteners[2]. A distillery marketing a 'diet' spirit product as artificial-sweetener-only could face audit reclassification if trace natural sugars are detected. Conversely, overpaying excise on correctly-classified low-sugar products represents unrecovered cash—no credit mechanism exists for excise tax[1]. FTA will determine sugar measurement methodology for concentrates, powders, gels (Article 6 of Cabinet Decision No. 197)[3]; absence of clear guidelines during transition creates classification ambiguity.

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