The UAE’s New Sugar-Based Excise Tax: What Beverage Businesses Must Understand in 2026

The UAE is introducing a significant transformation in how sweetened beverages are taxed. Rather than applying a fixed excise rate on beverage categories, the government has introduced a sugar-content-based tax model.

This framework was introduced under Cabinet Decision No. (197) of 2025, redefining how excise tax is calculated for sweetened beverages across the UAE.

Instead of taxing beverages uniformly, the new model directly links tax liability to the actual sugar concentration of the product.

Official legislation:
Cabinet Decision No.197 of 2025 – Excise Tax Rates and Calculation Methods (PDF)

For companies operating in the beverage sector, this reform introduces new compliance requirements that extend beyond traditional tax reporting.

How the Sugar-Based Tax Model Works

The updated framework establishes a tiered excise system based on sugar concentration per 100ml.

This structure aims to encourage beverage manufacturers to reduce sugar levels while promoting healthier consumer choices.

From a regulatory perspective, it also introduces a more precise and measurable tax mechanism.

Why This Reform Matters for Beverage Companies

The new excise model affects multiple business functions, including product formulation, pricing strategy, regulatory compliance, and import documentation.

Businesses may need to review:

• product recipes
• product labeling
• laboratory test reports
• excise tax calculations

Companies that fail to classify products correctly may face higher tax liabilities or regulatory scrutiny.

The Role of Laboratory Testing

One of the most critical elements of the new system is verified sugar analysis.

Manufacturers and importers must now provide laboratory evidence confirming the sugar concentration of each beverage product.

Without verified documentation, authorities may categorize products in the highest tax bracket by default.

This makes accurate testing and documentation essential for compliance.

Strategic Adjustments Businesses Should Consider

To adapt effectively to the new excise tax framework, companies should consider the following actions:

Product Reformulation
Reducing sugar content may significantly lower excise tax obligations.

Supply Chain Documentation
Ensure all imported products are supported by verified technical documentation.

Tax Planning
Evaluate how excise tax affects product margins and pricing models.

 How ACME Group Supports Excise Tax Compliance

ACME Group provides specialized advisory services to help businesses navigate the UAE’s evolving tax landscape.

Our support includes:

• excise tax compliance assessments
• product classification guidance
• regulatory advisory
• FTA audit preparation

Our objective is to help companies maintain compliance while optimizing their operational efficiency.

Conclusion

The UAE’s shift toward sugar-based taxation signals a broader regulatory trend toward data-driven and health-focused fiscal policy.

Companies that proactively adapt their compliance strategies will be better positioned to operate efficiently within the new framework.

If your business imports, manufactures, or distributes sweetened beverages in the UAE, now is the time to review your excise tax strategy.

Speak with ACME Group’s tax specialists to assess your compliance with readiness.

Disclaimer: The Content offer general guidance and should not be considered legal, financial, or tax advice. Consult qualified professionals for personalized guidance. While efforts have been made to ensure accuracy, no guarantee is provided for completeness or applicability to individual situations. Users are responsible for their interpretation and actions based on this information, at their own risk.

For understanding more about Corporate Tax, VAT, Excise Tax, Financial Services, Advisory Services, reach out to us on: contact@acme-group.me |+971 52 740 1169.