Effective 1 January 2026, the UAE replaced the flat 50% excise tax on sugar-sweetened beverages with a tiered taxation system, where the applicable tax rate depends on the sugar or artificial sweetener content of each product.
Key Changes
Who Will Be Affected?
Practical Implications
For manufacturers and distributors
For retailers
Key Changes
- Introduction of a multi-tier excise tax:
- 50% for beverages containing more than X g of sugar per 100 ml (high sugar content).
- 25% for beverages containing between Y and X g of sugar per 100 ml (moderate sugar content).
- 0% for beverages without added sugar, beverages containing artificial sweeteners, or natural fruit juices.
- A transitional period for manufacturers is expected to remain in place until 30 June 2026, allowing time to reformulate products.
- Beverage classification and customs notification procedures have been simplified.
Who Will Be Affected?
- Beverage manufacturers and distributors (including Coca-Cola, Pepsi, and local brands).
- Supermarkets and retail chains.
- Importers of beverages and beverage ingredients.
- Restaurants, cafés, and food service businesses.
- Consumers, who may experience price changes.
Practical Implications
For manufacturers and distributors
- Review pricing strategies and product profitability.
- Reformulate beverages to reduce sugar content and qualify for lower tax brackets.
- Update nutritional labeling and product documentation.
- Prepare inventory and production plans during the transition period.
For retailers
- Update shelf prices and POS systems.
- Revise nutritional information where required.
- Prepare for increased demand for low-sugar beverages.
- Higher prices are expected for high-sugar beverages.
- Increased availability and demand for healthier, low-sugar alternatives.