The Federal Tax Authority (FTA) has issued a new Excise Tax Public Clarification (EXTP013), providing critical guidance on the tiered volumetric excise tax model for sweetened drinks, effective 1 January 2026.
This clarification marks a significant shift in how excise tax on sweetened beverages will be calculated, reported, and audited in the UAE. Businesses involved in the manufacture, import, distribution, or storage of sweetened drinks must act early to ensure compliance and avoid unnecessary tax exposure.
Access the official FTA clarification PDF here:
Download FTA Excise Tax Clarification – Sweetened Drinks (EXTP013)
Overview of the New Tiered Excise Tax Model
From 1 January 2026, excise tax on sweetened drinks will be determined based on sugar content per 100ml, replacing the previous flat-rate approach.
New Excise Tax Rates
| Sugar Content | Excise Tax Rate |
| High sugar (≥ 8g / 100ml) | AED 1.09 per litre |
| Moderate sugar (5g – < 8g / 100ml) | AED 0.79 per litre |
| Low sugar (< 5g / 100ml) | AED 0 per litre |
| Artificially sweetened drinks | AED 0 per litre |
Important: Even where the tax rate is 0%, all Excise Tax registration, declaration, and compliance obligations still apply.
Mandatory Laboratory Certification Requirement
One of the most critical compliance changes introduced by the FTA is the mandatory submission of a laboratory certificate.
What Businesses Must Do:
- Obtain a MOIAT-approved laboratory report confirming sugar content
- Submit the certificate during product registration or update on EmaraTax
- Maintain proper documentation for audit purposes
Failure to submit the certificate will result in automatic classification of the product as “High Sugar”, triggering the highest excise tax rate.
Transitional Relief Period (January – June 2026)
To support businesses during the transition, the FTA has introduced limited transitional relief.
If a business initially pays excise tax at a higher rate due to missing or delayed certification, and later proves:
- Lower sugar content, or
- Non-taxability
then excess excise tax may be claimed as deductible, subject to strict conditions, including:
- Stock must be unsold
- Proper documentation must be available
- Correct declarations must have been made
This relief is not automatic and will be closely scrutinized.
Treatment of Concentrates, Powders, and Syrups
For concentrates, powders, and syrups, excise tax will be calculated based on the ready-to-drink product after preparation.
Key points:
- Preparation instructions must be clear and accurate
- Sugar calculation must reflect the final consumable product
- If instructions are missing, incorrect, or misleading, the FTA will apply a standardised calculation mechanism, which may result in higher tax exposure
Stock Held as of 1 January 2026
Businesses holding sweetened drink inventory on 1 January 2026 must:
- Review stock levels carefully
- Assess stockpiling implications under Excise Tax rules
- Ensure correct valuation and declaration of taxable stock
Failure to address stock transition properly can result in penalties and reassessments.
What This Means for Businesses
This clarification clearly signals that Excise Tax compliance in the UAE is moving toward greater standardisation, documentation, and audit readiness.
Businesses should proactively:
- Review product formulations and sugar content
- Obtain and validate laboratory certificates
- Update product registrations on EmaraTax
- Reassess pricing, margins, and supply chain impact
- Strengthen internal excise tax controls and record-keeping
How The Capital Zone Can Help
At The Capital Zone, we support businesses across the full spectrum of Excise Tax compliance, including:
- Excise Tax registration and product classification
- MOIAT lab certificate review and validation
- EmaraTax product registration and updates
- Stock transition and excise exposure assessments
- Audit readiness and FTA clarification impact analysis
Our team ensures your business remains fully compliant, audit-ready, and strategically prepared for the 2026 excise tax changes.
Need clarity on how this update affects your products?
Speak to The Capital Zone’s tax experts today for a tailored Excise Tax impact assessment.
