18-07-2025
UAE tightens tax rules on sugary drinks: What you need to know
The Ministry of Finance and the Federal Tax Authority (FTA) in UAE have announced a major revision to the excise tax structure applied to sugar-sweetened beverages (SSBs), introducing a new tiered volumetric model that links the tax per litre to the beverage's sugar content.
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Under the updated mechanism, the higher the sugar content per 100ml, the higher the tax rate applied per litre. This marks a departure from the current flat-rate model, which taxes all SSBs equally regardless of sugar levels,
Part of broader health and sustainability strategy
The move aligns with the UAE's broader public health strategy aimed at reducing sugar consumption, encouraging healthier lifestyles, and incentivising manufacturers to lower sugar content in their products.
The revised tax model is expected to take effect at the beginning of 2026, pending the issuance of the relevant implementing legislation. Authorities say the early announcement is intended to give suppliers, importers, and other stakeholders sufficient time to prepare. Businesses are advised to begin updating internal systems, reviewing product formulations, and ensuring their tax records are aligned with the new framework.
According to the Ministry of Finance, the enhanced model reflects the UAE's commitment to using innovative financial and legislative tools to support national health goals. Unlike the previous classification-based approach, the new system directly links the tax burden to sugar content, thereby tying fiscal measures to health outcomes.
'The updated mechanism encourages manufacturers to reduce added sugars and empowers consumers to make more informed dietary choices,' the Ministry said in a statement.
The policy also contributes to broader regional efforts to harmonise tax systems across the Gulf and supports the use of taxation as a lever for sustainable development.
Implementation set for 2026 with industry support measures
To ensure a smooth rollout, the Ministry of Finance, in cooperation with the Federal Tax Authority and other relevant entities, will launch public awareness campaigns in the coming months. These efforts aim to educate stakeholders and ensure full compliance across the business sector ahead of the 2026 implementation.
The system has been developed in close coordination with the Ministry of Health and Prevention to ensure alignment with national public health priorities and measurable improvements in dietary behaviour.
Further details, including specific tax rates and implementation guidelines, will be released in due course to support businesses during the transition period.
