- UAE tax sugar drinks based on sugar content starting from 2026.
- The flat 50% tax on sweet drinks will be replaced by the Chinese-based tier system.
- More sugar = high tax; Low sugar = reduced tax.
- The purpose of change is to cut sugar intake and encourage healthy products.
- Businesses get time to prepare; Full rollout in 2026.
The UAE Federal Tax Authority (FTA) has announced a major improvement in its excise tax system, which connects future tax rates on Chinese-sweet beverages (SSB) to its sugar content. Starting in 2026, the current flat 50% tax will be replaced by a tier model based on the amount of 100 ml sugar, which is part of a comprehensive effort to reduce sugar consumption and support healthy options.This step declared on Friday, July 18, 2025 supports the widespread goals of the UAE: reducing the intake of harmful products, improving public health, and diversifying revenue beyond oil. Since 2017, excise tax has applied to items such as tobacco, energy drinks, carbonated drinks and later, sweet drinks and electronic smoking devices.This latest update represents a change from a “one-shaped-fit-everyone” model, a change from a volumetric perspective, which better reflects the health effects of individual products.
Sugar-based tier taxation model starting in 2026
Starting in 2026, the excise tax applied to sweet beverages will depend on how much sugar is in the product only instead of its category. Under the current model, a flat is taxed at a 50% rate, including sweet drinks, ready-to-drink soda, energy drinks, and powder drinks mix. Under the new model, beverages with more sugar content per 100 ml will be taxed at a higher rate per liter, while people with low sugar content will be lowering tax. It aims to encourage manufacturers to improve their products with low sugar, which can lead to widespread availability of healthy options in the market. The FTA emphasized that the new system is being introduced not only to change pricing, but also to support a meaningful change in consumer behavior and manufacturing standards. The authority said, “The new policy is designed to encourage healthy yogas,” can make healthy beverages more economical and accessible for UAE residents.
Timeline, stake support and implementation strategy
The FTA announcement provides enough time to prepare business, especially local drink makers and importers, for infection. The authority confirmed that the rollout would be in 2026, planning more than a year, will be given to stakeholders for more than one year to plan its production lines and modify the products where necessary. To facilitate change, the FTA will conduct a series of awareness campaigns to fully understand the upcoming policy to fully understand the upcoming policy. The implementation of the system is being conducted in close coordination with the Ministry of Health and Prevention, so that the tax mechanism can be aligned with national public health strategies and average improvement in diet consumption patterns can be distributed. The FTA also said that additional technical details and implementation guidelines would be announced to support full industry compliance.
Excise in UAE: What it covers and why it matters
Excise tax in the United Arab Emirates is ruled by the federal decree-law number 7 of 2017 and was introduced as an indirect tax:
- Reduce consumption of dangerous and harmful products.
- To promote long -term public health reforms.
- Support environmental protection, especially through low use of electronic smoking devices.
- Removing the revenue of the government from oil.
- Install a strong regulator compliance structure for harmful items.
- Increase consumer awareness through pricing transparency and preventive taxes.
Excise Tax 2017 was introduced on tobacco, carbonated drinks and energy drinks, and in 2019 it was expanded to cover electronic smoking devices, their fluids and sugar-sweet beverages.
5. Current excise rates and coverage (current governance)
Current excise rates under the current system are:
Product Category | Excise tax rate |
---|---|
Tobacco product | 100% |
energy drink | 100% |
Electronic smoking equipment | 100% |
Electronic smoking devices | 100% |
Products with additional sugar or sweetness (SSB) | 50% |
Carbonated drinks | 50% |
Sweet beverages include:
- Ready-to-drink drinks with additional sugar or sweetness.
- Powder, gels, or extracts used to make sweet drinks are used.
- Sources of sugar such as:
- white sugar
- Brown sugar
- Piral
- Glucose syrup
- Artificial and natural sweetness, including:
- Sakarin
- aspartame
- Sorbitol
- Netm
Exemption from sweet drink tax (under current regime):
- At least 75% milk or milk beverages
- Baby formula and baby meal
- Medical or dietary nutrition product
Alcoholic beverages
FAQS:
Question: What is changing the UAE excise on sugar drinks?From 2026, the tax will be based on sugar content instead of 50% flat,Question: Why is this change happening?To reduce sugar consumption, improve public health and support healthy options.Question: Which drinks will be affected?All Chinese-sweet drinks, ready-to-drink and powder mix.Question: Will all sugary drinks be levied a single tax?No. More taxes will be levied on high sugar drinks; Low sugar drinks will be reduced.Question: Is it time to adjust businesses?Yes. The policy begins in 2026, and FTA will provide support and guidance.