INSIGHTS

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

The UAE’s transition to a tiered volumetric excise tax system represents one of the most significant regulatory changes for beverage manufacturers and distributors. Instead of applying a fixed percentage tax, the new system taxes drinks based on their sugar content, creating a direct financial incentive for businesses to produce lower-sugar

Step 1: Understand the Tiered Model Sugar Content (per 100 ml) Excise Tax (AED/L) ≥ 8 g 1.09 5–8 g 0.79 < 5 g 0 Only artificial sweeteners 0 Accurate sugar measurement is mandatory. (tax.gov.ae)   Step 2: Lab Testing & Approval Obtain lab-tested sugar content reports from accredited labs. Reports must be submitted to the

Last updated: February 9, 2026 The UAE’s move to a tiered volumetric excise tax for sweetened drinks is one of the most significant shifts in indirect taxation for beverage producers, importers, and distributors. Effective 1 January 2026, excise tax is calculated based on sugar content per liter, replacing the prior flat-rate model. (tax.gov.ae)

What Is the Tiered Volumetric Excise Tax? The tiered model replaces the flat-percentage excise tax with a structure where tax is determined by sugar and sweetener content per litre. (tax.gov.ae) Key objectives of the reform include: Aligning tax with product sugar content Encouraging healthier product formulations Supporting public health objectives