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June 26, 2026
Amendments are expected to be made to the UAE Excise Tax legislation to enable transition to a tiered-volumetric model for the calculation of Excise Tax on Sweetened Drinks. This Public Clarification outlines the key aspects of the upcoming changes that Taxable Persons should be aware of, to enable them to prepare for the changes that may come into force as soon as 1 January 2026.
Under the new rules, a Sweetened Drink will be defined as a product to which a source of sugar, artificial sweeteners or other sweeteners is added that is produced for consumption as a drink, whether ready to drink, in the form of concentrates, powders, gels, extracts, or any form that can be converted into a drink.
A tiered-volumetric model for calculating Excise Tax will be implemented for Sweetened Drinks, whereby Excise Tax will be calculated based on the amount of sugar or other sweeteners instead of at a fixed rate as is currently the case.
Excise Tax will be calculated based on the total sugar content (natural sugar, added sugar, and other sweeteners) in a Sweetened Drink, where the Sweetened Drink contains any added sugar or other sweeteners (e.g. honey).
Where a drink contains only natural sugar without any added sugar or other sweeteners, Excise Tax will not apply.
Under the volumetric model, Sweetened Drinks that contain only artificial sweeteners, and do not contain added sugar or other sweeteners, will be subject to zero Excise Tax.
A date will be announced by the FTA from which Taxable Persons may only register Sweetened Drinks as Excise Goods where a lab report is provided to show the sugar content as a supporting document.
Definition of Sweetened Drinks
Under the proposed rules, a Sweetened Drink is a product to which a source of sugar, artificial sweeteners or other sweeteners is added and is intended for consumption as a drink. This includes drinks in various forms such as ready to drink, concentrates, powders, gels, extracts, or any form that can be converted into a drink.
Under the new rules, Carbonated Drinks will be abolished as a separate category of Excise Good. Instead, the applicability of Excise Tax on Carbonated Drinks shall be determined based on their sugar content and categorisation as Sweetened Drinks.