UAE to Introduce Tiered Excise Tax on Sweetened Drinks from 2026

The UAE Federal Tax Authority (FTA) has introduced important details about the upcoming tiered excise tax system on sweetened drinks. However, it is set to take effect from early 2026. Moreover, the move aims to motivate healthier consumption habits by connecting taxation directly to sugar and sweetener content rather than applying a flat rate across all beverages.

This development is a big change in how excise taxes will be calculated. In addition, it is a part of the broader efforts of the UAE to promote public health and align with the global best practices in tax transparency and compliance. 

What Is the “Tiered Volumetric Model”?

The new excise tax will depend on the tiered volumetric model, which determines tax based on the total sugar and sweetener content per 100 millilitres of a drink. Instead of a fixed rate, tax rates are going to differ across four main categories. Below is the list of those categories:

• High-sugar drinks: 8g or more of total sugar/sweeteners per 100ml
• Moderate-sugar drinks: 5g or more but less than 8g per 100ml
• Low-sugar drinks: Less than 5g per 100ml
• Artificially sweetened drinks: Subject to 0% excise tax if no added sugar is used

It is important to note that drinks that contain only natural sugars without any added sweeteners will be exempt from this system. Moreover, energy drinks will continue to be taxed at the existing 100 per cent excise rate. However, carbonate beverages will no longer be treated as a separate category as separate category, as their tax will depend on sugar content alone. 

Definition of “Sweetened Drink”

According to the upcoming legislation, it refers to any beverage that includes added sugar, artificial sweeteners, or other sweetening agents. However, the following is the list of examples of these drinks:

• Ready-to-drink beverages
• Concentrates and powders
• Gels, extracts, or any product that can be converted into a drink

The detailed definition ensures that all sweetened drink formats fall under the excise framework. 

UAE Certificate of Conformity

Producers, importers, and stockpilers must apply for a UAE Certificate of Conformity, issued by the Ministry of Industry and Advanced Technology (MoIAT), to comply with the new model. However, this certificate is based on the lab tests from accredited facilities (ENAS, ISO/IEC 17025). Hence, it will specify the following:

•  The total sugar and sweetener content in the beverage
• Whether the drink contains artificial sweeteners

The authority has also clarified that any beverage not covered by a valid certificate is going to automatically be classified as a high-sugar drink until the verified lab results prove otherwise. 

Early Preparation Urged for Tiered Excise Tax

The FTA has requested that all producers, importers, and distributors to begin reviewing the sugar content of their products before 2026. Moreover, they have provided the business with the following suggestions:

1. Test and verify sugar levels in their beverages
2. Apply for the UAE Certificate of Conformity online
3. Register excise goods once the legislation is issued
4. Update product records and ensure operational readiness

Early preparation is going to ensure a smooth transition and help avoid compliance issues once the system comes into effect. 

FTA’s Awareness Drive

The FTA has launched a nationwide awareness campaign to educate businesses and customers on the new objectives, tax calculation methods, and reporting requirements of the model. 

In addition, detailed guidance and public classification have also been published on the official portal of the FTA, i.e, www.tax.gov.ae. These resources explain how to determine sugar and sweetener content, the tiered classification system, and how to calculate excise tax under the new rules.

Why This Matters?

The new excise tax framework shows the commitment of the UAE to public health, transparency, and economic diversification. Moreover, the government aims to reduce sugar consumption and lifestyle-related diseases by incentivising producers to reduce sugar content. 

The initiative also aligns with the federal strategy of the nation to adopt international best practices in digital taxation and voluntary compliance. Hence, it makes the nation the first in the region to implement a data-driven, tiered taxation model.

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