UAE Introduces Tiered Volumetric Excise Tax on Sweetened Beverages: Key Changes at a Glance
Overview: The UAE Ministry of Finance has announced significant amendments to the Excise Tax regime for sweetened beverages through Cabinet Decision No. (197) of 2025. Effective from 1 January 2026, Excise Tax on sweetened drinks will shift from a flat value based rate to a tiered volumetric model based on sugar content per 100 milliliters.
What Has Changed
Previously, sweetened beverages were subject to a flat 50 percent Excise Tax calculated on the excise price, regardless of sugar levels. Under the revised framework, tax is now linked directly to sugar concentration, aligning excise policy with public health objectives and encouraging lower sugar consumption.
Old vs New Excise Tax Model
| Aspect | Previous Model | New Model (From 2026) |
|---|---|---|
| Tax basis | 50 percent of excise price | Fixed amount per litre |
| Calculation method | Value based | Volumetric based on sugar content |
| Sugar consideration | Not considered | Central to classification |
| Public health alignment | Limited | Strong |
Tiered Excise Tax Rates for Sweetened Beverages
| Sugar Content per 100ml | Excise Tax Treatment |
|---|---|
| 8 grams or more | AED 1.09 per litre |
| 5 grams or more but less than 8 grams | AED 0.79 per litre |
| Less than 5 grams | Exempt |
| Artificial sweeteners only | Exempt |
Quick Examples
Example 1: High Sugar Beverage
A 330ml soft drink containing 9g of sugar per 100ml will attract Excise Tax of: 0.33 litres × AED 1.09 = AED 0.36 per unit.
Example 2: Moderate Sugar Beverage
A 500ml iced tea with 6g of sugar per 100ml will fall under the moderate tier and attract Excise Tax of: 0.5 litres × AED 0.79 = AED 0.40 per unit.
Example 3: Low or Zero Sugar Beverage
A beverage containing less than 5g of sugar per 100ml or only artificial sweeteners will be fully exempt from Excise Tax under the new model.
Product Classification and Compliance
Classification under the tiered model depends on approved laboratory reports confirming sugar content. Where documentation is not submitted, the Federal Tax Authority will classify the product under the highest sugar tier by default, with reclassification permitted once compliant reports are provided.
What Businesses Should Do Now
- Review sugar content across all sweetened beverage SKUs.
- Obtain MOIAT accredited laboratory reports.
- Assess pricing and margin impact under per litre taxation.
- Update ERP and excise reporting systems.
- Prepare excise registrations ahead of January 2026.
How Univia Can Help
Univia Global Consultancy assists manufacturers and importers with excise impact assessments, product classification, laboratory coordination and ongoing excise compliance to ensure readiness for the tiered volumetric model.
Source Attribution: Ministry of Finance announcement dated 11 December 2025, Cabinet Decision No. (197) of 2025 and Federal Decree Law No. 7 of 2025 on Excise Tax.
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