UAE Introduces New Sugar-Based Excise Tax For Sweetened Drinks From 2026

The Ministry of Finance of the UAE released a new framework that reshapes how sweetened beverages are taxed in the UAE. Through Cabinet Decision No. 197 of 2025, authorities have confirmed that a tiered volumetric model will now determine excise tax rates based on sugar content in the UAE.

UAE Sets Tiered Excise Tax For Sweetened Drinks From 2026

The update is part of a broader push to strengthen public health policies by targeting high-sugar products, as mentioned in a report by Gulf News. They are one of the causes of lifestyle-related diseases. Officials say the refreshed system offers a more transparent structure to reduce confusion around how excise tax applies across different drink categories.

How The New Sugar-Based System Works

Under the model, the tax rises with sugar levels measured per 100 millilitres. 

Here’s the section rewritten cleanly in bullet points, with tight, newsroom-style clarity:

• The new model links the tax rate directly to the sugar content measured per 100 millilitres.
• Drinks containing 5 to under 8 grams of sugar per 100 millilitres will incur a charge of AED 0.79 per litre.
• Products with 8 grams or more of sugar per 100 millilitres will be taxed at AED 1.09 per litre.
• Beverages with less than 5 grams of sugar per 100 millilitres are exempt from tax.
• Drinks made with only artificial sweeteners also fall entirely outside the taxable category.

Also, the system is designed to push producers towards a cleaner formulation of beverages by linking a surge in tax rates directly to sugar content.  

Compliance, Reporting And Classification

Alongside the new rates, the Ministry has outlined detailed procedures for how products will be classified. The Federal Tax Authority will maintain an official price list and check the sugar content in beverages under approved testing standards. Companies are liable to submit laboratory reports and supporting documents for the same. On failure of submission, authorities will apply the highest tax tier by default. It can undergo review and correction of the rate once the proper documentation arrives.

The rules are intended to close compliance gaps that previously allowed inconsistencies in reporting. They also give the market clarity on the steps required to stay on the right side of the law, especially as more beverage producers introduce sugar-reduced or reformulated products.

Also Read: From Saudi Arabia’s Sugar Tax To 100 KG National Day Giant Cake In UAE, 5 GCC Updates

Implementation Timelines And Public Health Goals

All changes linked to the tiered volumetric model will take effect on 1 January 2026. The Ministry of Finance has framed the update as a long-term investment in public health. The ultimate goal is to reduce illnesses associated with heavy sugar intake. 

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