The UAE Ministry of Finance has announced a major change in beverage taxation, which will take effect from January 1, 2026. The current flat 50% excise tax on sugar-sweetened beverages will be replaced with a tiered system based on sugar content per 100ml.
This new system aims to encourage healthier consumption and reduce sugar intake among residents, while creating a competitive environment for beverage manufacturers.
How the New Tax System Works
Under the updated framework, beverages will be taxed according to their sugar content:
- High sugar drinks: 8g or more per 100ml.
- Medium sugar drinks: Between 5g and 7.9g per 100ml.
- Low sugar drinks: Less than 5g per 100ml.
- No sugar or artificially sweetened drinks: No excise tax applies.
Energy drinks will continue to be taxed at 100%, regardless of sugar content.
This structure allows consumers to make healthier choices and encourages producers to reformulate products with lower sugar levels.
Impact on Consumers and Businesses
Consumers may see price differences based on the sugar content of their preferred beverages. Drinks with higher sugar content may cost more, while low-sugar options could become more affordable.
Businesses will need to update product labels and ensure compliance through sugar content testing. Importers and producers who have already paid the 50% excise tax on products before January 2026 can claim deductions if the new tiered tax rate is lower and the goods remain unsold.
Health and Policy Implications
The new sugar tax aligns with the Gulf Cooperation Council’s regional model for excise taxes on sugar-sweetened beverages. It supports the UAE’s broader public health strategy by aiming to reduce obesity and diabetes risks.
By linking tax directly to sugar content, the policy encourages both manufacturers and consumers to make healthier choices. It also reflects the UAE’s commitment to promoting wellness and sustainable consumption in line with national health goals.
Preparing for Implementation
Businesses and consumers are advised to plan for the upcoming changes. Supermarkets, cafes, and restaurants should:
- Review current beverage inventory.
- Update product labels with accurate sugar content information.
- Conduct lab tests to verify sugar levels where required.
Consumers may benefit by choosing low-sugar or no-sugar alternatives, which could be more cost-effective under the new system. Staying informed will help both businesses and buyers transition smoothly when the new tax comes into effect.
As of January 1, 2026, the UAE sugar tax will transition to a tiered structure based on sugar content, replacing the current flat 50% excise rate. The shift is expected to promote healthier consumption habits, influence product reformulation, and create a fairer tax environment.
Businesses and consumers in Dubai and across the UAE should prepare early to adapt to the changes, ensuring compliance and cost efficiency.
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