UAE Excise Tax on Sweetened Drinks: Executive Summary Effective Date: January 1, 2026

 The Fundamental Reform 

On January 1, 2026, the UAE implemented a comprehensive reform to its excise tax regime for sweetened drinks, transitioning from a flat 50% ad valorem rate to a sophisticated tiered-volumetric system based on sugar content. This reform fundamentally changes how beverages are taxed, classified, and regulated in the UAE. 

Key Change: Tax is no longer calculated as a percentage of price but as a fixed amount per liter based on sugar content, creating four distinct tax categories ranging from zero to AED 1.09 per liter. 

The Legal Framework 

The reform is established through Cabinet Decision No. 197 of 2025 (issued November 27, 2025) and implemented via two FTA Decisions (No. 10 and 11 of 2025, issued December 12, 2025). These are supported by public clarifications (EXTP012 and EXTP013) and a Ministry of Industry and Advanced Technology (MoIAT) technical guideline on laboratory testing requirements. 

The legislation repeals Cabinet Decision No. 52 of 2019 and abolishes the separate "carbonated drinks" category entirely. Carbonated beverages are now taxed based solely on sugar content. 

What is a "Sweetened Drink"? 

A sweetened drink is any product to which sugar, artificial sweeteners, or other sweeteners have been added, produced for consumption as a drink. This includes ready-to-drink beverages, concentrates, powders, gels, extracts, and any convertible form. 

Critical Point: Products containing ONLY naturally-occurring sugar (like 100% orange juice with no additives) are NOT sweetened drinks and are NOT taxable. 

Key Exclusions 

Six categories are excluded from the definition: 

1. Milk-based beverages (≥75% milk in ready-to-drink form) 

2. Milk substitute beverages (≥75% milk substitutes, e.g., almond milk with 120mg calcium/100ml) 

3. Baby products (formula, follow-up formula, baby food) 

4. Special dietary beverages (per GCC Standard 654) 

5. Medical nutrition products (per GCC Standard 1366) 

6. Restaurant-prepared drinks in open, unsealed containers for immediate consumption 

The Four Tax Categories 

Category 1: High-Sugar Drinks 

• Definition: ≥8 grams total sugar/other sweeteners per 100ml 

• Tax Rate: AED 1.09 per liter 

• Examples: Regular sodas, traditional sweetened juices, high-sugar beverages 

Category 2: Moderate-Sugar Drinks 

• Definition: ≥5g to <8g total sugar/other sweeteners per 100ml 

• Tax Rate: AED 0.79 per liter 

• Examples: Reduced-sugar juices, lightly sweetened beverages, some sports drinks 

Category 3: Low-Sugar Drinks 

• Definition: <5g total sugar/other sweeteners per 100ml 

• Tax Rate: AED 0.00 per liter (zero-rated but compliance required) 

• Examples: Minimally sweetened flavored waters, very light juice drinks 

Category 4: Artificially Sweetened Drinks 

• Definition: Contains ONLY artificial sweeteners, OR artificial sweeteners + <5g sugar per 100ml 

• Tax Rate: AED 0.00 per liter (zero-rated but compliance required) 

• Examples: Diet sodas, zero-sugar drinks, beverages sweetened with stevia/aspartame 

Important: Even zero-rated categories require full compliance including laboratory testing, MoIAT certification, product registration, and periodic tax returns. 

Sugar Calculation Rules: The Critical Distinction 

The Fundamental Rule: If a drink contains ANY added sweetening agent (sugar, artificial sweetener, or other sweetener), then ALL sugar including naturally-occurring sugar counts toward the total for classification purposes. 

Example 1: Orange juice (9g natural sugar) with NO additives = NOT taxable 
Example 2: Same orange juice with 3g added sugar = 12g total = High-Sugar category (AED 1.09/liter) 
Artificial sweeteners are NOT counted in grams for tier classification but determine eligibility for Category 4. Other sweeteners (honey, agave, maple syrup) ARE counted toward total sugar content. 

Mandatory Laboratory Testing 

Every sweetened drink product must undergo testing by an ISO/IEC 17025 accredited laboratory to determine sugar and sweetener content. 

Testing Requirements 

For products claiming 100% natural juice: 

• HPLC (High Performance Liquid Chromatography) 

• IRMS (Isotope Ratio Mass Spectrometry) - to prove no added sugar 

• Artificial sweetener testing 

Note: Only 2 labs in UAE currently offer IRMS: Abu Dhabi Quality and Conformity Council (ADQCC) and SGS Gulf Limited. 

For sweetened beverages: 

• HPLC for sugar quantification 

• Artificial sweetener testing 

Accredited Laboratories 

Six MoIAT-accredited laboratories plus 13 EGAC-accredited laboratories are available. Testing costs range from AED 250-2,750 per product depending on tests required. Turnaround time is typically 5-7 working days. 

Report Requirements: 

• Results in grams per 100ml (g/100ml) with decimal precision 

• Valid for one year from issue date 

• One certificate covers all sizes of same product but separate certificates needed for different flavors 

MoIAT Certificate of Conformity 

Before registering products on the FTA's EmaraTax platform, businesses must obtain a Certificate of Conformity from MoIAT. 

Cost: AED 1,290 per certificate (AED 670 certificate fee + AED 620 document review fee) 

Required Documents: 

• Valid trade/industrial license 

• Laboratory test report from accredited lab 

• Official manufacturer declaration (ingredients, sugar content, conformity) 

• Product label artwork 

• Additional certifications if applicable (EQM, Halal, Organic marks) 

• Tax registration number (if available) 

Processing Time: 2-3 working days if all documents are complete and correct 

Application: Via MoIAT's ECAS portal at https://eservices.moiat.gov.ae/eservices 

Special Rules for Concentrated Products 

For concentrates (powders, syrups) without preparation instructions or with inaccurate instructions, FTA applies a standard calculation mechanism: 

Formula: Maximum RTD Volume (ml) = Sugar content per unit (g) × 20 

Tax Calculation: Always at moderate rate (AED 0.79/liter) regardless of actual sugar content when using this mechanism. 

Example: 100g powder with 50g sugar = 1,000ml maximum RTD = AED 0.79 tax per packet 

Exceptions: Liquid concentrates with <5g sugar/100ml or containing only artificial sweeteners are taxed at AED 0.00/liter. 

Transitional Relief Period (Jan 1 - June 30, 2026) 

Companies that paid high-sugar tax (AED 1.09/liter) due to lack of laboratory certificate can claim deductions if they later obtain certificates proving lower category or no tax liability. 

Strict Conditions: 

1. Products must NOT have been sold before certificate obtained 

2. Laboratory report proving lower category required 

3. Copy of previous declaration showing high-sugar tax payment required 

4. Documentary evidence proving non-sale required 

Critical Deadline: June 30, 2026. After this date, no transitional relief available. 

Compliance Roadmap 

Step 1: Assess product portfolio and determine which are "sweetened drinks" 

Step 2: Engage accredited laboratory for testing (4-6 weeks before launch) 

Step 3: Apply for MoIAT Certificate of Conformity (2-3 weeks processing) 

Step 4: Register products on EmaraTax platform using certificate reference 

Step 5: Implement operational controls for tax calculation, documentation, and reporting 

Step 6: File periodic excise tax returns (monthly or quarterly) by 15th of following month 

Step 7: Renew laboratory certificates annually (begin 2-3 months before expiry) 

Default Classification Risk 

Critical: Products registered without laboratory certificates automatically default to High-Sugar Category (AED 1.09/liter) until proper certification obtained. This is not a penalty but a compliance mechanism. 

Key Dates 

• November 27, 2025: Cabinet Decision 197/2025 issued 

• December 12, 2025: FTA Decisions 10 & 11/2025 issued 

• January 1, 2026: New system effective 

• June 30, 2026: Transitional relief period ends 

Practical Impact Examples 

500ml bottle with 10g sugar/100ml: 

• Old system: AED 1.00 tax (50% of AED 2 excise price) 

• New system: AED 0.545 (0.5L × 1.09) 

• Change: -45.5% tax reduction 

500ml bottle with 6g sugar/100ml: 

• Old system: AED 1.00 tax 

• New system: AED 0.395 (0.5L × 0.79) 

• Change: -60.5% tax reduction 

Diet soda (artificial sweeteners only): 

• Old system: AED 1.00 tax 

• New system: AED 0.00 

• Change: -100% (but compliance still required) 

Conclusion 

The UAE's tiered excise tax system creates strong incentives for product reformulation while providing businesses with predictable, transparent tax treatment. Mandatory laboratory testing and certification ensure accurate classification and prevent manipulation. 

Companies must act immediately to obtain certificates, register products, and establish robust compliance frameworks. The transitional relief period offers a limited window to correct classifications, but this expires June 30, 2026. 

This reform demonstrates the UAE's commitment to evidence-based health policy while maintaining business certainty through clear, objective classification criteria based on internationally-recognized laboratory testing standards. 

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