Dubai Duty Free (DDF) is emphasising the value proposition of its tobacco business after the UAE’s excise tax on tobacco, energy drinks and soft drinks began on 1 October.

As reported, the President of the UAE issued Federal Decree-Law No. 7 earlier this year that placed a tax on goods consumed inside the country, including all the country’s free zones and ports.

Crucially however, duty free tobacco sales made on departure are exempted from the ruling, with customers only charged if they exceed the 400 cigarette allowance on arrival into Dubai.

Confirming the exemption to DDF’s departure tobacco sales in a recent interview, Executive Vice Chairman and CEO Colm McLoughlin said: “We think that the introduction of excise duty is good for Dubai and good for the UAE.

“We’re looking at it [the excise tax] very positively from the view of Dubai Duty Free, because it will indicate what good value we are offering and the revenue is needed by the government.”

The UAE government has made clear that the introduction of the excise tax is to discourage the consumption of products that are detrimental to the environment and people’s health.

Funds from the tax are designed to bolster government revenues in order to strengthen the economy and boost its resources.

The tax is a precursor to a Gulf Cooperation Council-wide value added tax (VAT) on products and services, beginning 1 January 2018.

In a wide-ranging discussion, McLoughlin also updated TRBusiness on DDF’s financial expectations for year-end 2017, and discussed the flurry of retail activity at Al Maktoum International Airport.

To view the full interview, see above or click here to read the November issue of TRBusiness.