Introduction
The UAE has announced a major update to its excise tax policy on sweetened beverages, set to take effect on January 1, 2026. Instead of taxing drinks based on product categories, the new system will adopt a tiered volumetric model based on sugar content.
This landmark policy aligns with the GCC’s regional strategy to promote public health and establish more competitive and transparent tax systems. It will directly impact manufacturers, distributors, retailers, and importers operating in the UAE.
If your business deals in beverages or imports goods into the UAE, now is the time to start preparing.
Shift from Category-Based to Sugar-Based Taxation
Currently, sweetened beverages in the UAE face a flat 50% excise tax. Under the new structure, taxation will depend on how much sugar or sweetener a product contains. Beverages with higher sugar content will be subject to higher tax rates, while healthier or low-sugar options may fall under lower tax tiers.
This move encourages producers to reformulate their drinks and reduce sugar levels to remain competitive in the market.
Nationwide Implementation from January 2026
The UAE Ministry of Finance has completed legislative amendments to support the implementation of this sugar-content-based taxation. Starting January 1, 2026, the policy will be rolled out nationwide, ensuring a consistent regulatory framework for all businesses involved in beverage production and distribution.
This shift reflects a region-wide initiative by GCC countries to adopt more health-focused tax models.
Why This Policy Matters
The updated sugar tax policy is designed to:
- Promote healthier consumer choices by discouraging high-sugar products.
- Encourage beverage manufacturers to innovate and create healthier alternatives.
- Strengthen the UAE’s tax infrastructure, aligning with global best practices.
- Create a fair and competitive business environment where taxation is based on actual product composition.
Impact on Businesses & Required Actions
If you are a manufacturer, importer, or distributor, these changes will affect your pricing, accounting, and tax reporting. Businesses should:
- Review product portfolios to assess sugar levels and potential tax implications.
- Update pricing structures to reflect the new tiered tax rates.
- Adjust accounting and reporting systems to comply with the revised excise regulations.
- Seek professional tax support to avoid penalties or compliance issues.
This is particularly important if you’re already registered for Corporate Tax and VAT services, as your excise tax responsibilities will now become a key compliance area.
How The Capital Zone Can Help
Adapting to regulatory changes can be challenging, but that’s where The Capital Zone comes in. Our expert team can support you with:
- Excise Tax Registration & Compliance for beverage businesses.
- Portfolio analysis to determine the sugar-content tax impact.
- Strategic tax planning to minimize liabilities.
- End-to-end accounting and reporting, ensuring timely filings with the UAE Ministry of Finance.
We also provide Company Formation services for businesses entering the UAE market and Accounting & Bookkeeping solutions to keep your financial records fully compliant.
Conclusion
The new sugar tax policy is more than just a regulatory update, it’s a step towards healthier communities and a modernized tax system. With the changes coming into effect from January 1, 2026, businesses should act now to review their products, pricing, and compliance frameworks.
At The Capital Zone, we’re ready to help your business navigate these changes smoothly, ensuring you stay compliant while optimizing your tax position.
Contact us today to get expert guidance on excise tax and other regulatory matters.
