The UAE Ministry of Finance has confirmed that the new rules updating the excise tax of the country on sugar-sweetened beverages (SSBs) will come into effect on the 1st of January 2026. Moreover, this new excise tax on sugary drinks rule aims to modernize the tax framework to align with the Gulf Cooperation Council (GCC) standards. In addition, it aims to promote healthier customer choices.
According to the Ministry, the updated policy is the completion of the essential legislative amendments to embed the new excise tax structure into the national law. Moreover, it follows the adoption of the GCC of a tiered volumetric model for taxing sugary drinks.
How the New Tiered Excise Tax on Sugary Drinks System Works
All sugar-sweetened beverages are now taxed at a flat 50% rate under the current law. However, the UAE will shift to the tiered tax system from 2026, where the rate will depend on the sugar or sweetener content in each beverage.
This approach means that the beverage with high sugar levels will face higher taxes. However, those with lower sugar levels will face lower taxes. So, the policy aimed to motivate manufacturers to reduce the sugar levels in their products to provide healthier options for customers.
Apart from that, the ministry also clarified that importers and producers who have already paid the existing 50% tax on the unsold goods can deduct the part of the previously paid tax if the new rates are lower once the system takes effect.
Promoting Public Health and Sustainable Growth
The ministry said that the updated excise tax shows the dedication of the UAE to global best practices and GCC regulations. Moreover, the reform also supports the public health goals, like efforts to reduce sugar consumption, combat obesity, and lower diabetes risks.
On top of that, the new system is going to strengthen trust in the financial and tax environment of the UAE. Hence, it promotes economic sustainability and provides businesses with sufficient time to adjust before 2026.
A Step Toward a Modern Tax Framework
The Ministry highlighted that these amendments are part of the ongoing efforts to modernize the tax system of the UAE. Hence, it ensures that it is efficient, fair, and forward-looking. Moreover, it aligned with the long-term fiscal and social objectives of the nation.
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