Abu dhabi: Starting 1 January 2026, the United Arab Emirates will implement a new mechanism for calculating Excise Tax on sweetened drinks using the 'Tiered-Volumetric Model'. This system links the tax amount imposed per litre of sweetened drink to the total quantity of sugar and other sweeteners per 100 ml.
According to Emirates News Agency, this change follows Cabinet Decision No. 197 of 2025, which aligns with the amendments to Federal Decree-Law No. 7 of 2025 on Excise Tax. The Federal Tax Authority (FTA) confirmed that this decision is part of efforts to promote a healthier society by reducing the consumption of harmful goods.
The FTA has introduced a service on the EmaraTax digital platform for registering sweetened drinks in accordance with the new tax mechanism. This service aims to replace the current fixed-rate Excise Tax calculation method. As of 1 January 2026, producers, importers, and stockpilers of sweetened drinks must obtain the 'Emirates Conformity Certificate for Sugar and Sweeteners Content in Beverages' from the Ministry of Industry and Advanced Technology's website.
The FTA emphasized the importance of submitting this certificate during the registration or update of beverage registrations via the EmaraTax platform. Without this certificate, beverages will be classified under the 'High Sugar' category until proven otherwise.
To ensure a smooth transition, the FTA has been conducting awareness campaigns and has issued a public clarification on the new tax application. Comprehensive information is available on their website regarding the new mechanism and its requirements.
Under the new model, Excise Tax will be calculated based on the total sugar and sweeteners content in sweetened drinks. Beverages with only natural sugar will be exempt. Carbonated drinks will be taxed based on their sugar content, while energy drinks will continue to be taxed at the current 100% rate.
The new model classifies sweetened drinks into four categories: High-sugar, Moderate-sugar, Low-sugar, and Artificially sweetened drinks, each with specific tax rates. This initiative aims to promote healthier consumption habits in the UAE.