- UAE to tax sugary drinks primarily based on sugar content material beginning 2026.
- Flat 50% tax on sweetened drinks can be changed by a sugar-based tiered system.
- Extra sugar = greater tax; much less sugar = decrease tax.
- Change goals to chop sugar consumption and encourage more healthy merchandise.
- Companies get time to arrange; full rollout in 2026.
The UAE Federal Tax Authority (FTA) has introduced a serious reform to its excise tax system, linking future tax charges on sugar-sweetened drinks (SSBs) to their sugar content material. Beginning in 2026, the present flat 50% tax can be changed by a tiered mannequin primarily based on the quantity of sugar per 100ml, a part of a wider effort to scale back sugar consumption and help more healthy decisions.The transfer, introduced on Friday, July 18, 2025, helps the UAE’s broader objectives: decreasing the consumption of dangerous merchandise, bettering public well being, and diversifying income past oil. Since 2017, excise tax has utilized to items like tobacco, power drinks, carbonated drinks, and later, sweetened drinks and digital smoking gadgets.This newest replace represents a shift from a “one-size-fits-all” tax mannequin to a tiered, volumetric method, which can higher replicate the well being affect of particular person merchandise.
Beginning in 2026, the excise tax utilized to sweetened drinks will depend upon how a lot sugar is within the product slightly than merely its class. Beneath the prevailing mannequin, sweetened drinks, together with ready-to-drink sodas, power drinks, and powdered drink mixes, are taxed at a flat 50% charge. Beneath the brand new mannequin, drinks with greater sugar content material per 100ml can be taxed at the next charge per litre, whereas these with decrease sugar content material can be taxed much less. That is supposed to encourage producers to reformulate their merchandise with much less sugar, resulting in a wider availability of more healthy choices out there. The FTA emphasised that the brand new system is being launched not simply to alter pricing, however to help a significant shift in client behaviour and manufacturing requirements. “The brand new coverage is designed to incentivize more healthy formulations,” the authority famous, and should make more healthy drinks extra inexpensive and accessible to UAE residents.
Timeline, Stakeholder Assist & Implementation Technique
The FTA’s announcement provides companies, notably native beverage producers and importers, ample time to arrange for the transition. The authority confirmed that the rollout will happen in 2026, giving stakeholders effectively over a yr to plan, adapt their manufacturing strains, and modify product formulations the place needed. To facilitate the change, the FTA will conduct a collection of consciousness campaigns to make sure stakeholders totally perceive the upcoming coverage. The implementation of the system is being carried out in shut coordination with the Ministry of Well being and Prevention, to make sure the tax mechanism aligns with nationwide public well being methods and delivers measurable enhancements in dietary consumption patterns. The FTA additionally said that extra technical particulars and implementation pointers can be introduced sooner or later to help full trade compliance.
Excise Tax within the UAE: What It Covers and Why It Issues
Excise tax within the UAE is ruled by Federal Decree-Legislation No. 7 of 2017 and was launched as an oblique tax to:
- Cut back consumption of hazardous and dangerous merchandise.
- Promote long-term public well being enhancements.
- Assist environmental safety, particularly by means of lowered use of digital smoking gadgets.
- Diversify authorities revenues away from oil.
- Set up a strong regulatory compliance framework for dangerous items.
- Increase client consciousness by means of pricing transparency and deterrent taxes.
The excise tax was launched in 2017 on tobacco, carbonated drinks, and power drinks, and expanded in 2019 to cowl digital smoking gadgets, their liquids, and sugar-sweetened drinks.
5. Present Excise Tax Charges and Protection (Current Regime)
Listed below are the present excise tax charges below the prevailing system:
| Product Class | Excise Tax Fee |
|---|---|
| Tobacco merchandise | 100% |
| Power drinks | 100% |
| Digital smoking gadgets | 100% |
| Liquids utilized in digital smoking gadgets | 100% |
| Merchandise with added sugar or sweeteners (SSBs) | 50% |
| Carbonated drinks | 50% |
Sweetened Drinks Embrace:
- Prepared-to-drink drinks with added sugar or sweeteners.
- Concentrates, powders, gels, or extracts used to make sweetened drinks.
- Sugar sources akin to:
- White sugar
- Brown sugar
- Powdered sugar
- Glucose syrup
- Synthetic and pure sweeteners, together with:
- Saccharin
- Aspartame
- Sorbitol
- Neotame
Exemptions from Sweetened Beverage Tax (Beneath Current Regime):
- Drinks containing no less than 75% milk or milk substitutes
- Toddler components and child meals
- Medical or dietary vitamin merchandise
Alcoholic drinks (regulated individually)
FAQs:
Q: What’s altering within the UAE’s excise tax on sugary drinks?From 2026, the tax can be primarily based on sugar content material as an alternative of a flat 50%.Q: Why is this alteration occurring?To scale back sugar consumption, enhance public well being, and help more healthy decisions.Q: Which drinks can be affected?All sugar-sweetened drinks, together with ready-to-drink and powdered mixes.Q: Will all sugary drinks be taxed the identical?No. Greater sugar drinks can be taxed extra; decrease sugar drinks can be taxed much less.Q: Do companies have time to regulate?Sure. The coverage begins in 2026, and the FTA will present help and steerage.
