UAE to Introduce Sugar-Based Excise Tax in 2026: What Beverage Manufacturers Need to Know
The UAE’s New Approach to Sugar Taxation
The UAE is taking a major step toward promoting healthier lifestyles with the introduction of a sugar-based excise tax on sweetened beverages, coming into effect on 1 January 2026.
This marks a shift from the current flat 50% tax on all sweetened drinks to a tiered system that links the tax directly to sugar content. The change reflects the UAE’s long-term commitment to public health and aligns with international best practice seen in countries such as the UK and Saudi Arabia.
From Fixed to Sugar-Based Taxation
Under the current excise framework, all sweetened beverages face a 50% retail price tax, regardless of how much sugar they contain.
From January 2026, the Federal Tax Authority (FTA) will introduce a volumetric, sugar-tiered system based on the following thresholds:
Low sugar: below 5g of sugar per 100ml
Medium sugar: between 5g and 8g per 100ml
High sugar: above 8g per 100ml
Drinks sweetened with artificial sweeteners will still require excise registration but may qualify for a 0% tax rate, depending on their classification.
Key Changes
| Aspect | Current System | New 2026 System |
|---|---|---|
| Tax Basis | 50% of retail price | Tax per litre based on sugar content |
| Categories | All sweetened beverages | Low (<5g/100ml), Medium (5–8g/100ml), High (>8g/100ml) |
| Artificial Sweeteners | Taxed at 50% | Likely 0% tax but must still register |
| Effective Date | Ongoing | 1st January 2026 |
Why the UAE in Making the Change
The new model is part of the UAE’s National Health Strategy 2031 and Vision 2030, which focus on reducing sugar intake and combating lifestyle-related diseases such as obesity and diabetes.
By introducing a tax structure that rewards lower-sugar formulations, the government aims to:
Encourage manufacturers to reformulate beverages with less sugar
Support consumer awareness around sugar content
Align taxation with health objectives
The message is clear: reduce sugar, reduce tax.
Key Regulatory Changes for Beverage Companies
The new policy affects every part of the beverage supply chain, including manufacturers, importers, and distributors. Businesses will need to take action in the following areas:
1. Laboratory Testing and Certification
All beverages must have verified sugar reports from MOIAT-accredited laboratories. Products without certified data will be taxed at the highest tier by default.
2. Label and Dossier Consistency
Sugar levels must match exactly across Arabic labels, product dossiers, and lab reports. Any inconsistencies can lead to import holds or reclassification.
3. FTA Excise Registration Updates
Companies will need to update each SKU within the FTA Excise Goods Portal with revised sugar data before the new law takes effect.
4. ERP and Pricing Adjustments
Finance teams should start adapting internal systems now to calculate excise per litre rather than as a percentage of retail price.
What Brands / Manufacturers Should Do Before 2026
Map all product SKUs currently imported or registered in the UAE.
Book laboratory testing early to avoid delays as the deadline approaches.
Review labels and ingredients for accuracy and compliance.
Consider reformulation: reducing sugar by even 1–2g per 100ml could move a product into a lower tax band.
Update internal teams and systems to prepare for the new reporting requirements.
The new sugar-based excise system will have the greatest impact on soft drink and flavoured beverage manufacturers, along with importers and distributors of syrups and concentrates. Private label brand owners that depend on third-party factories, as well as retailers needing to adjust pricing and stock for reformulated products, will also be affected. Businesses that act early to test, relabel, and update registrations will be best placed to stay compliant, competitive, and avoid costly last-minute changes.
Get Ahead of the 2026 Transition
If you would like to understand how the new tiered sugar tax could affect your product range, and the opportunities it may create in the UAE once the official details are released in January, you can book a call with us to discuss your options.
Book a free 15-minute consultation to discuss your product portfolio and plan your next steps.