Excise Tax on Sweetened Beverages to Shift to Sugar-Based Model from 2026

In a significant move to support public health, the UAE Ministry of Finance and the Federal Tax Authority (FTA) have announced a change in the application of excise tax on sugar-sweetened beverages. Starting in early 2026, the current flat 50% excise tax on sweetened drinks will be replaced by a tiered system based on the actual sugar content per 100ml.

Under the new model, beverages with higher sugar levels will face a higher tax per litre. This approach is designed not only to discourage the consumption of high-sugar products but also to motivate manufacturers to reduce sugar content in their offerings.

The shift from a category-based tax to a sugar-based one aligns with the UAE’s broader goals of encouraging healthier lifestyle choices, improving dietary habits, and reducing the long-term health risks associated with excessive sugar intake. The revised tax system was developed in collaboration with the Ministry of Health and Prevention to ensure it aligns with national health objectives.

By announcing the change well in advance, the FTA aims to give businesses—including suppliers and importers—ample time to adapt. Companies are encouraged to review their product formulations, update internal systems, and align their compliance records with the new requirements.

To support a smooth transition, the FTA and relevant authorities will launch awareness campaigns and provide further guidance in the lead-up to implementation. The announcement also highlights the UAE’s intent to enhance regional tax policy coordination and use fiscal tools to advance sustainable development.

More details are expected to follow as the legislative framework is finalized.