In a significant step toward promoting healthier lifestyles, the UAE will revamp how it taxes sweetened beverages, shifting from a flat-rate system to one based on sugar content, Khaleej Times reported.
Starting in 2026, the Federal Tax Authority (FTA) and the Ministry of Finance confirmed that excise tax on sweetened drinks will no longer apply to the entire product category but will instead depend on the actual amount of sugar in the beverage.
This move is expected to encourage food and beverage companies to lower sugar levels in their products, potentially making healthier options more available to consumers. The decision was announced more than a year in advance to give manufacturers time to adjust their formulas accordingly.
Excise tax in the UAE was introduced in 2017 to discourage the consumption of harmful products such as carbonated drinks, tobacco, and energy drinks. By 2019, it expanded to include electronic smoking devices and sweetened drinks.
Currently, sweetened drinks are taxed at a flat 50 percent rate, along with carbonated beverages. Energy drinks and tobacco-related products carry a 100 percent excise rate. However, with the upcoming policy shift, sweetened drinks will no longer fall under this flat list structure.
The FTA also stated that awareness campaigns will be conducted to ensure that all stakeholders are informed about the changes well ahead of implementation.
