30 July 2025 • 2 minute read
UAE to introduce new excise tax model for sweetened beverages starting 2026
Background and key features of the new excise tax system
The Ministry of Finance and the Federal Tax Authority (FTA) have announced an amendment to the excise tax on sugar sweetened beverages.
Under the current model, a flat 50% excise tax is applied based on product classification, without considering the actual sugar content. In contrast, the new system will introduce a tiered volumetric model, where the tax per litre is proportionate to the sugar content per 100ml.
As a result, beverages with higher sugar content will be subject to higher tax rates. Further details will be provided in the implementing legislation which is expected to be published soon.
The new model is expected to take effect at the beginning of 2026, which gives UAE businesses sufficient time to prepare. Suppliers and importers will need to review product formulations, update internal systems, and ensure their records with the FTA are aligned with the new requirements. The new model also incentivizes manufacturers to lower sugar levels in their beverages.
According to the official announcement, the amendment has been adopted in close coordination with the Ministry of Health and Prevention to promote healthy lifestyle and reduce the consumption of high-sugar products.
Key takeaway
The UAE will update and replace its current flat-rate excise tax on sugar sweetened beverages with a tiered volumetric model. Based on the new model, the tax rate per litre will be linked to the sugar content per 100ml.
This change is expected to encourage manufacturers to reduce sugar levels in their products and raise awareness about healthier dietary choices.