From 1 January 2026, the UAE replaced its flat 50% excise rate on sweetened drinks with a sugar-based tiered system — meaning your actual tax bill now depends on your product's exact sugar content, not a blanket percentage.
For businesses that import, produce or distribute sweetened drinks in the UAE, Excise Tax just became a genuinely more complex calculation. Cabinet Decision No. 197 of 2025 replaced the old flat 50% excise rate on sweetened drinks with a tiered, volumetric model effective 1 January 2026 — tax is now charged per litre based on grams of sugar or sweetener per 100ml, not as a percentage of the product's price.
The New Sugar-Content Bands
- Under 5g of sugar per 100ml: 0% — exempt from excise tax under this category
- 5g up to (but not including) 8g of sugar per 100ml: AED 0.79 per litre
- 8g of sugar per 100ml or more: AED 1.09 per litre
- Drinks sweetened only with artificial sweeteners, or with sugar content under 5g per 100ml, remain at the 0% band
- Products lacking approved conformity or laboratory certification of their actual sugar content are automatically taxed at the highest band, AED 1.09 per litre, until certified otherwise
What This Replaces
Previously, all sweetened drinks were taxed at a flat 50% of the excise price, regardless of how much sugar they actually contained — a lower-sugar drink and a heavily sweetened one paid the same rate. The tiered volumetric model ties the tax directly to sugar content instead, which changes the relative cost position of reformulated, lower-sugar products versus their traditional recipes.
A 330ml can of a traditional sweetened soft drink with 11g of sugar per 100ml previously attracted the same 50%-of-price excise rate as a lower-sugar alternative. Under the new model, that same can — at 11g per 100ml, which falls in the 8g-or-more band — is taxed at AED 1.09 per litre, working out to roughly AED 0.36 in excise tax on the can. A competing 330ml drink reformulated down to 6g of sugar per 100ml instead falls into the 5g-to-under-8g band at AED 0.79 per litre, working out to roughly AED 0.26 on the same can size — a direct, quantifiable tax incentive to reformulate toward lower sugar content.
Energy Drinks Are Treated Differently
Energy drinks remain outside this new tiered model and continue to be taxed at 100% of the excise price under the existing method used before this reform — the tiered sugar-band system applies specifically to sweetened (non-energy) drinks.
What Businesses in Scope Need to Do
- Obtain accurate, certified sugar-content lab testing for every sweetened drink SKU you import, produce or stock — uncertified products default to the highest tax band
- Recalculate landed cost and pricing for each SKU based on its specific band, rather than a blanket 50% assumption
- Review supplier and formulation decisions, since the tax difference between bands can now be a meaningful part of per-unit cost
- Confirm Excise Tax registration is current — registration is mandatory before trading in excise goods, with no revenue threshold
How Corcess Helps
We help importers, producers and distributors of sweetened drinks map their product range against the new sugar bands, coordinate the required conformity certification, and keep Excise Tax registration, stock reporting and declarations aligned with the new calculation method from day one.