UAE Excise Tax 2026: Understanding the New Tiered Volumetric Model for Sweetened Drinks

The UAE has introduced a major change to its excise tax framework with the implementation of a tiered volumetric model for sweetened drinks, effective 1 January 2026.

This reform replaces the previous 50% excise tax applied on the retail selling price with a system where tax is calculated per liter based on the sugar content of beverages.

The Federal Tax Authority (FTA) issued Public Clarification EXTP012 to explain the new mechanism and help businesses transition to the updated excise framework.

What Changed in 2026?

• Sweetened drinks are now taxed based on sugar content per 100 ml.
  • The previous 50% excise tax on retail price has been replaced with a volumetric model.
  • Excise tax rates are now applied per liter depending on sugar concentration.

Excise Tax Rate Structure

Typical tax tiers include:

• Low sugar (<5g per 100ml): 0 AED per liter
• Moderate sugar (5–8g per 100ml): 0.79 AED per liter
• High sugar (>8g per 100ml): 1.09 AED per liter

This structure encourages manufacturers to reduce sugar levels in beverages.

Sector-Specific Impacts

Manufacturers

• Product reformulation may reduce excise tax liability
•  Sugar testing and laboratory reports are required

Importers

• Customs documentation must include verified sugar content

Retailers

• Shelf prices may vary depending on sugar classification

Compliance Checklist

1. Conduct laboratory testing for sugar content
2. Register beverage SKUs through the EmaraTax platform
3. Update pricing and ERP systems
4. Train finance teams on new excise calculations
5. Monitor FTA guidance and updates

Common Pitfalls

• Missing laboratory reports
•  Incorrect sugar classification
• Outdated excise tax calculations
•  Failure to register products correctly

ACME Group can help businesses review their excise tax compliance and adapt to the new sugar-based tax model.

Book your consultation via acme-group.ae

FAQs

Why did the UAE introduce the tiered excise tax model?
To encourage healthier beverage consumption and align excise taxation with sugar content.

When did the new excise tax rules take effect?
1 January 2026.

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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