The UAE will overhaul its excise tax regime on sugar-sweetened beverages in 2026, shifting from a flat-rate model to a new tiered structure that ties tax levels to the amount of sugar per 100ml in each product.
Announced by the Ministry of Finance and the Federal Tax Authority (FTA), the revised framework will apply a variable tax rate per litre depending on sugar concentration, replacing the current uniform 50% levy imposed on all sugary drinks regardless of their composition. The move aims to realign fiscal policy with health-related outcomes and encourage manufacturers to cut sugar content in their product lines.
The Ministry said the new tax design is scheduled to take effect at the start of 2026, following the issuance of detailed implementing legislation. Stakeholders, including importers and suppliers, will be given time to adapt operations, update IT systems, and reformulate products to meet compliance standards.
The revised policy was developed in coordination with the Ministry of Health and Prevention. According to officials, the volumetric tax model directly links fiscal pressure to sugar intensity, which is expected to serve as a disincentive for high-sugar products and support dietary shifts at the consumer level.
This follows international trends, where similar sugar-indexed taxes in the UK, Ireland and Malaysia led to measurable reductions in sugar consumption and a shift in manufacturer behaviour. Studies by the WHO and UNDP show that sugar-linked excise regimes can be more effective than flat taxes in both curbing demand and generating targeted public revenue. One UNDP model suggests the UAE could see a 10% drop in sugary drink intake and raise over Dh20 billion in cumulative health tax revenue if it sustains its fiscal health strategy.
Officials also indicated that the policy is part of broader efforts to harmonise tax tools across the Gulf and reinforce the use of fiscal policy in public health and sustainable development initiatives. A joint awareness campaign by the FTA and relevant health bodies is planned ahead of the rollout.
More information, including sugar thresholds, tax rate bands, and reporting requirements, will be issued in the final quarter of 2025. Businesses have been advised to begin readiness planning immediately to avoid compliance risks.
