Tiered Excise Tax on Sweetened Drinks_ What Cabinet Decision No. (197) of 2025 Means for UAE Businesses

What Is Cabinet Decision No. (197) of 2025?

The decision introduces a tiered excise calculation for sweetened beverages based on sugar content per 100ml.

New tax tiers:

• < 5g sugar / 100ml: 0 AED (0%)
• 5g to < 8g sugar / 100ml: 0.79 AED per liter
• 8g+ sugar / 100ml: 1.09 AED per liter
• Artificial sweeteners only: 0 AED (subject to conditions)

This replaces the previous flat 50% excise rate, fundamentally changing cost structures.

Why This Change Matters Financially

The new model affects:

• ●       Product pricing strategies
• ●       Gross margins
• ●       Import and customs declarations
• ●       Inventory valuation
• ●       Tax forecasting accuracy

Businesses may now pay more or less excise tax depending on formulation, not selling price.

Conformity Certificates: A New Compliance Requirement

Producers and importers must obtain a UAE Conformity Certificate confirming sugar content to determine the correct tax tier.

Failure to obtain certification may result in:

• Customs clearance delays
• Incorrect tax application
• Administrative penalties

FTA reference materials are available via the Excise Tax legislation page.

Practical Steps Businesses Must Take

1. Review product formulations and sugar levels
2. Map products to applicable excise tiers
3. Obtain conformity certificates before import or production
4. Update ERP, pricing, and tax reporting systems
5. Train finance and logistics teams

Frequently Asked Questions

Does this apply to existing stock?
Yes. Special treatment may apply to stock sold after Jan 1, 2026.

Can businesses reduce excise tax legally?
Yes, through product reformulation within permitted limits.

Businesses must reassess excise exposure now to avoid disruptions in 2026.
Request an excise impact assessment today.

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.

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