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UAE: Changes to excise tax rates for sweetened drinks

Sweetened drinks are now taxed based on sugar content (low, moderate, and high)

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january 6, 2026

The UAE Ministry of Finance announced the issuance of Cabinet Decision No. (197) of 2025, which introduces a tiered, sugar-based volumetric regime for sweetened drinks, replacing the previous flat-rate model. The decision is effective from January 1, 2026. This change impacts product classification, pricing, and compliance for businesses dealing in sweetened drinks.

Until December 31, 2025, sweetened drinks were subject to a flat excise tax rate of 50%. Effective January 1, 2026, sweetened drinks are taxed based on sugar content: low (0 AED per liter), moderate (0.79 AED per liter), and high (1.09 AED per liter). Certain products, such as beverages containing at least 75% milk, baby formula, and drinks for special dietary needs, are excluded from the definition of sweetened drinks.

The federal tax authority (FTA) has also introduced transitional relief for deductions of excise tax paid in excess, applicable from January 1, 2026, to June 30, 2026.

Read a January 2026 report prepared by the KPMG member firm in the UAE

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