Commencement of implementation of new Excise Tax mechanism on Sweetened Drinks based on 'Tiered-Volumetric Model' effective from 1 January 2026

Starting 1 January 2026, the new mechanism for calculating Excise Tax on Sweetened Drinks based on the “Tiered-Volumetric Model” will come into force in the UAE.

Under this model, the amount of tax imposed per litre of a sweetened drink is linked to the total quantity of sugar and other sweeteners per 100 ml of the drink. This is in accordance with Cabinet Decision No. 197 of 2025 on Excise Goods, Tax Rates or Amounts Imposed on Excise Goods, and the Methods of Calculating the Excise Price, which will enter into force as of 1 January 2026, in line with the latest amendments to Federal Decree-Law No. 7 of 2025 on Excise Tax.

The Federal Tax Authority (FTA) confirmed that the new Decision forms part of ongoing efforts to implement the directives of the wise leadership to accelerate the development of a safe and healthy society, by reducing the consumption of harmful goods and mitigating the societal impacts and costs associated with combating non-communicable diseases resulting from consumption patterns that are detrimental to public health.

The FTA explained that, as part of early preparations to ensure the smooth implementation of the decision, the Authority has recently launched, via the EmaraTax digital tax services platform, a new service for registering the sweetened drinks in accordance with the new Excise Tax calculation mechanism based on the “tiered-volumetric model”, replacing the current method of calculating the Excise Tax as a fixed-rate.

The service leverages the latest artificial intelligence technologies and is characterised by simplicity, speed, and efficiency, in line with the FTA’s ongoing enhancement of its services and customer experience.

The FTA further noted that, as of 1 January 2026, all producers, importers, and stockpilers of sweetened drinks will be required to obtain the “Emirates Conformity Certificate for Sugar and Sweeteners Content in Beverages (for Excise Tax purposes)” through the official website of the Ministry of Industry and Advanced Technology. This must be done after obtaining laboratory test results from one of the accredited laboratories listed on the official websites of the UAE’s accreditation bodies (the National Accreditation Department and the Emirates International Accreditation Centre).

Once the certificate has been obtained, it must be submitted to the FTA while registering or updating the registration of the beverages via the EmaraTax digital tax services platform.

The FTA also stressed that, if this mandatory certificate is not obtained and submitted as part of the registration procedures, the beverage will be classified as a sweetened drink under the “High Sugar” category until a laboratory report is provided proving that its sugar content is below the threshold prescribed for this category.

The FTA has, over the past months, been keen to implement a comprehensive plan for early awareness of the new mechanism. In September, it issued a public clarification outlining the key features of the amendment to the application of Excise Tax on sweetened drinks, which can be accessed via the link: Public Clarification on Excise Tax – Transition to a Tiered Volumetric Model for Excise Tax for Sweetened Drinks.

Comprehensive information, presented in a clear and user-friendly manner, has been made available on the FTA’s website regarding the new mechanism, its objectives, requirements, and the method for determining the sugar and other sweetener content in sweetened drinks. This information can be accessed via the link: Excise Tax under the Tiered-Volumetric Model.

Related legislation and other decisions associated with the new mechanism can also be viewed via the link: Legislation.

The FTA confirmed that, under the new mechanism, Excise Tax will be calculated based on the total content of sugar (natural sugar, added sugar, and artificial sweeteners or other sweeteners) in a sweetened drink, where it contains added sugar or other sweeteners (such as honey), whether the product is ready to drink or in the form of concentrates, powders, gels, extracts, or any other form that can be converted into a sweetened drink. However, if a beverage contains only natural sugar, with no added sugar or other sweeteners, Excise Tax will not be applied.

It further explained that, for sweetened drink that are not ready to drink, such as extracts, powders, gels, and similar products, information on sugar content and serving size, represented by the total number of servings that can be prepared in accordance with the preparation instructions stated on the product label, must be provided. This is to avoid any suspension of product’s registration, which could subsequently affect import procedures.

The FTA further confirmed that, with the implementation of the new mechanism, carbonated drinks will no longer be classified as a sperate category of Excise Goods. Instead, the applicability of Excise Tax to carbonated drinks will be determined based on their sugar and sweeteners content and whether they are classified as sweetened drinks.

Energy drinks, however, will remain subject to Excise Tax under the current calculation method, at a rate of 100% of the excise price, and will not be subject to the “tiered-volumetric model.”

The FTA clarified that, under the new model, Excise Tax on sweetened drinks will be applied based on their classification into four categories:

• High-sugar Sweetened Drinks: contain 8 grams or more of total sugar and other sweeteners per 100 ml and are subject to Excise Tax at a rate of Dhs1.09 per litre.

• Moderate-sugar Sweetened Drinks: contain 5 grams or more and less than 8 grams of total sugar and other sweeteners per 100 ml and are subject to Excise Tax at a rate of Dhs0.79 per litre.

• Low-sugar Sweetened Drinks: containing less than 5 grams of total sugar and other sweeteners per 100 ml and are subject to Excise Tax at a rate of zero dirhams per litre.

• Artificially sweetened Drinks: contain only artificial sweeteners or contain artificial sweeteners and sugar or other sweeteners of less than five 5 grams per 100 ml, are subject to Excise Tax at a rate of zero dirhams per litre.

WAM