UAE to Link Sweetened Beverage Tax to Sugar Content Starting 2026

In a major shift toward promoting public health, the UAE’s Ministry of Finance and the Federal Tax Authority (FTA) have announced that, starting in 2026, the excise tax on sweetened beverages will be determined by the actual sugar content of each product rather than applying a flat rate by product category.

This new regulation is designed to encourage healthier food and drink options and incentivize manufacturers to reduce sugar levels in their products. The announcement, made on Friday, gives companies ample time to review and adjust product formulations ahead of the policy rollout.

Until now, sweetened beverages were taxed at 50% excise, alongside other goods considered harmful to health such as carbonated drinks, tobacco products, and energy drinks. Under the new rule, however, the tax on sweetened beverages will vary depending on the sugar levels, aiming to create a fairer system that promotes health-conscious decisions.

The FTA confirmed it will launch awareness campaigns to help businesses and stakeholders understand the upcoming changes and ensure a smooth transition.

Background on Excise Tax in UAE

The excise tax in the UAE was first introduced in 2017, covering carbonated drinks, energy drinks, and tobacco. In 2019, the scope was expanded to include electronic smoking devices, associated liquids, and sweetened beverages.

The latest move aligns with ongoing public health efforts. For instance, Abu Dhabi’s Department of Education and Knowledge has banned junk food in schools and is pushing for sustainable, healthier food policies across educational institutions.

Current Excise Tax Rates in the UAE:

• 50% on carbonated drinks

• 100% on tobacco products

• 100% on energy drinks

• 100% on electronic smoking devices

• 100% on liquids used in these devices

• 50% on any product with added sugar or sweeteners (until 2026)

From 2026 onwards, sweetened drinks will no longer fall under a blanket 50% tax, but rather a sliding scale based on their sugar composition, creating new incentives for product innovation and public health improvements.