The UAE will become stricter on sugary drinks by introducing a new sugar-related excise tax framework that will be implemented on January 1, 2026. The move can be seen as an indicator of a stronger drive towards the protection of public health and the introduction of a higher level of clarity and coherence to the taxation of the sweetened drinks in the country.
The Ministry of Finance has attested under the Cabinet Decision No. 197 of 2025 that the country is changing to a tiered volumetric excise tax structure where the rate of taxes directly correlates with the sugar content of drinks. The greater the sugar content, the greater the tax—a sharp divergence, indeed, in contrast to more general, category-based taxation.
The authorities indicate that the new framework will help minimize the number of expenses associated with the excise classifications, as well as motivate manufacturers to minimize the amount of sugar in their products. The policy is consistent with broader population health initiatives to decrease lifestyle diseases that are associated with consuming too much sugar.
How the New Tax Model Works
In the form of the amended excise system, the excise tax is now going to be determined on the quantity of sugar per 100 millilitres of a beverage:
- 5 to under 8 grams of sugar per 100 ml: Taxed at AED 0.79 per litre
- 8 grams or more of sugar per 100 ml: Taxed at AED 1.09 per litre
- Less than 5 grams of sugar per ml: Exempt from excise tax
- Drinks sweetened solely with artificial sweeteners: Fully exempt
The structure will encourage beverage makers to develop more clean and low-sugar recipes instead of merely taking on the in-kind flat-rate levies.
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Compliance, Classification, and Reporting
The Ministry of Finance has put down strict compliance procedures to guarantee consistency and accountability. The Federal Tax Authority (FTA) will keep a formal list of prices and test sugar levels with authorized standards of testing.
The manufacturers and importers will be obliged to provide laboratory reports and supporting documents that prove the sugar content. In case of default on providing these documents, the top rate of tax will be charged. After the valid documentation has been provided, the tax rate can be revisited and revised.
The objective of these measures is to seal loopholes caused by loopholes in reporting, as well as to introduce uniformity to the product classification, particularly with the market trend toward sugar-reduced and reformulated beverages.
Effective Date and Public Health Focus
The sugar-based new excise tax system will become effective on 1st January 2026. Officials have called the move a long-term investment in the health of the population, the overall aim of which is to reduce sugar intake and decrease the rate of diet-related illnesses in the UAE.
To the consumer, the changes could affect the pricing and the products. In the case of businesses, the message is simple: reformulation, transparency, and compliance will play an important role as the UAE proceeds to become more health-conscious in terms of taxation.