INSIGHTS

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

Introduction The UAE Federal Tax Authority (FTA) has introduced guidelines on Natural Shortage of Excise Goods within Designated Zones (DZ). These rules clarify how businesses can handle unavoidable losses of Excise Goods—such as moisture loss, evaporation, or residues—without being subject to Excise Tax, provided proper procedures are followed. The guidelines