UAE Excise Tax 2026: What the FTA’s New Sweetened Drinks Clarification Means for Your Business 

With less than a year to go before the UAE’s tiered volumetric excise tax model comes into force, the Federal Tax Authority has issued a crucial Public Clarification addressing how sweetened drinks will be taxed from 1 January 2026. 

For manufacturers, importers, and distributors, this clarification is not optional reading — it sets the compliance baseline for 2026. 

1. From Flat Rate to Tiered Sugar Tax 

The excise tax on sweetened drinks will now depend on actual sugar content, divided into: 

• High-sugar 
• Moderate-sugar 
• Low-sugar 
• Artificially sweetened 

Each category carries a different tax burden, directly impacting pricing and margins. 

2. No Lab Report? High-Sugar by Default 

One of the most critical points in the clarification: 
Any product without an approved laboratory report or UAE Certificate of Conformity will be treated as high-sugar. 
This default rule significantly increases financial and audit risk for non-compliant products. 

3. Laboratory Testing Is No Longer Optional 

The FTA clearly confirms that accredited lab testing is essential to support sugar classification. Assumptions, supplier data, or foreign certificates may not be sufficient. 

This directly affects: 

• Product registration 
• Excise declarations 
• Deduction eligibility 

4. 2025 Is the Preparation Year 

Although the model applies from 2026, the FTA expects businesses to: 

• Review formulations now 
• Update excise product registrations 
• Correct historical assumptions 
• Align pricing and contracts 

Waiting until 2026 may be too late. 

5. Audit, Reclassification & Deduction Risks 

Misclassification can lead to: 

• Retroactive reassessments 
• Rejected excise deductions 
• Penalties during audits 

The clarification reinforces that documentation and timing are key. 

Join Our January 2026 Excise Tax Webinar 

ACME Group will host a specialised excise tax webinar covering: 

• Tiered sugar classification 
• Lab testing strategy 
• Repricing and compliance planning 
• Real-world FTA audit insights 

Designed specifically for the sweetened drinks sector 

Conclusion

The FTA’s latest clarification confirms one thing clearly: 
Excise tax compliance for sweetened drinks is becoming more technical, not less. 
Businesses that act in 2025 will control their tax exposure in 2026. Those that don’t may face costly corrections later. 

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.