New tax model on sugar-sweetened beverages in the UAE

The UAE Ministry of Finance has announced a set of proposed legislative amendments to embed the updated excise tax policy into the national legislation. This step is in line with the Gulf Cooperation Council’s adoption of a tiered model for excise tax on sugar-sweetened beverages (“SSB’s”).

What’s changing?

The UAE will introduce a new sugary and sweetened drink tax, taking effect from 1^st January 2026. The current flat 50% excise tax will be replaced with a tiered system and SSBs with higher sugar or sweetener content will be subject to higher tax. Drinks with no added sugar will be excluded entirely.

Importers and drinks manufacturers will have the flexibility to adjust taxes on stock already paid under the old tax system, ensuring a smooth transition. Persons or businesses who have imported or produced goods subject to 50% tax prior to the amendments coming into effect, and whose tax liability would decrease as a result of these amendments (before selling the goods for which tax was previously paid), will be able to deduct part of the previously paid tax.

All sugar-sweetened and beverages with additional sweeteners (artificial and otherwise) sold in the UAE will be subject to the new regime. The Ministry of Finance’s stated objective is to reduce sugar consumption, promote wellness and maintain fiscal sustainability.

What are the categories?

Here ‘sweetener’ refers to sugar or non-artificial added sweetener.

• More than 8g of sweetener per 100ml: drink will be ‘High Sugar’ and subject to the highest tax rate.
• Between 5g and 8g of sweetener per 100ml: drink will be ‘Moderate Sugar’ and subject to a middling tax rate.
• Less than 5g of sweetener per 100ml: drink will be ‘Low Sugar’ and subject to the lowest tax rate.
• If a drink only has artificial sweeteners (and no sugar or non-artificial sweeteners) it will be exempt under the new tax model.

This article will be updated to confirm the tax rates at each level once these have been announced.