UAE Tiered Excise Tax on Sweetened Beverages

The MoF (Ministry of Finance) Cabinet Decision No. (197) of 2025, introduced changes to how the excise tax applies to sweetened beverages in the UAE. If your business imports, manufactures, or sells sweetened drinks, these amendments will directly affect your tax obligations starting 01.01.2026.

A New Approach to Taxing Sugar

The UAE is moving away from a flat excise tax rate on sweetened beverages. In its place, a tiered volumetric model will determine the tax amount based on each product’s actual sugar content.

This new framework replaces the previous Cabinet Resolution No. (52) of 2019 on excise goods and aligns with recent updates to Federal Decree-Law No. (7) of 2025 on Excise Tax.

The goal is straightforward: encourage healthier consumption choices while creating a more transparent, more predictable tax structure for businesses operating in this space.

How the New Tax Tiers Work

Under the tiered volumetric model, the excise tax rate depends on grams of sugar per 100 millilitres of beverage.

Beverages containing between 5 grams and less than 8 grams of sugar per 100 millilitres will be taxed at AED 0.79 per litre. Products with 8 grams or more of sugar per 100 millilitres face a higher rate of AED 1.09 per litre.

There is good news for lower-sugar products. Beverages with less than 5 grams of sugar per 100 millilitres are exempt from excise tax entirely. The same exemption applies to drinks containing only artificial sweeteners.

Classification and Compliance Requirements

The FTA (Federal Tax Authority) will handle product classification and maintain an official price list for excise goods. As a taxable person, you will need to ensure your products are appropriately classified according to their sugar content.

Laboratory reports and supporting documentation play a central role in this process. If you fail to submit the required lab reports, the FTA will apply the highest tax rate by default. You can request a revision later by providing an approved laboratory report, but it is far better to have your documentation in order from the start.