Sweetened drinks excise tax in the UAE was fundamentally restructured from 1 January 2026 under Cabinet Decision No. 197 of 2025, replacing the previous flat 50% ad valorem rate with a tiered per-litre specific tax based on sugar content. FTA Decision No. 10 of 2025 establishes the mechanism for calculating sugar percentages in concentrated products. Abdelhamid & Co (FTA TAAN 20033908) assists beverage manufacturers and importers with classification, laboratory report requirements, and compliance with the new sugar-based tiered system.
What Is the Sweetened Drinks Excise Tax in the UAE
Under Article 7 of Cabinet Decision No. 197 of 2025, a "sweetened drink" is any product to which a source of sugar, artificial sweeteners, or any other sweeteners has been added, that is produced for consumption as a drink — whether ready-to-drink, concentrate, powder, gel, extract, or any form that can be converted into a sweetened drink.
"Sugar" is defined by reference to Standard 148 of the GCC Standardization Organization. "Artificial sweeteners" are per Standard 995 of the GSO. "Other sweeteners" means any type added for the purpose of sweetening, excluding artificial sweeteners. Critically, if naturally occurring sugar is present alongside added sugar, both are counted toward the sugar threshold.
Sweetened Drinks Excise Tax Rates — Tiered System from 2026
| Sugar content per 100ml | Tax rate | Category |
|---|---|---|
| 8 grams or more | AED 1.09 per litre | High-sugar |
| 5 to less than 8 grams | AED 0.79 per litre | Medium-sugar |
| Less than 5 grams | AED 0 per litre | Low-sugar (exempt) |
| Artificial sweeteners only (no sugar) | AED 0 per litre | Artificially sweetened (exempt) |
Exclusions from the Sweetened Drinks Definition
Article 7(5) of the Decision excludes several categories from the sweetened drinks definition. Beverages containing at least 75% milk (or 75% milk substitutes) of the ready-to-drink product are excluded. "Milk" includes animal milk, remanufactured milk, powdered milk, yoghurt, and whey but excludes cream. "Milk substitutes" are plant-based drinks with consistency similar to milk containing 120mg calcium per 100ml.
Baby formula, follow-up formula, and baby food are excluded, as are beverages for special dietary needs (per GSO Standard 654) and medical beverages (per GSO Standard 1366). Freshly prepared beverages served in restaurants in open, unsealed containers for direct consumption are also excluded — covering coffee shops, juice bars, and similar establishments.
Sugar Calculation for Concentrated Products — FTA Decision No. 10 of 2025
FTA Decision No. 10 of 2025 (effective 1 January 2026) establishes the mechanism for calculating sugar percentages when producer guidelines are unavailable or proven inaccurate. This is critical for importers of syrups, powders, and concentrates.
The calculation works as follows: the taxable person obtains a Laboratory Report from an accredited laboratory (per the Ministry of Industry and Advanced Technology list) showing total sugar and other sweetener content. The volume of the final drink is calculated by multiplying the total sugar content in grams by 20. The Dilution Ratio equals the final drink volume divided by the volume or weight of the concentrated product unit.
Two exclusions apply: if a liquid concentrate contains less than 5g sugar per 100ml per the Laboratory Report, it is classified as low-sugar (zero rate). If it contains only artificial sweeteners, it falls under the artificially sweetened category (also zero rate).
Laboratory Report Requirements for Sweetened Drinks Classification
Under Article 13(4) of Cabinet Decision No. 197 of 2025, businesses are obligated to submit a laboratory report accepted by the FTA proving the quantity of sugar and other sweeteners in their sweetened drinks, and whether they contain artificial sweeteners. The laboratory must be accredited per the Ministry of Industry and Advanced Technology's published list.
If this report is not submitted, the tax is imposed at the highest sugar category (AED 1.09/litre). Tax can be corrected to the appropriate category only after submission of a valid laboratory report. This creates a strong compliance incentive to obtain testing before or immediately upon importing or producing sweetened drinks.
Sweetened Drinks Excise Tax — Rounding and Calculation Rules
Under Article 10(4) of Cabinet Decision No. 197 of 2025, if the tax calculation results in fractions of a Fils, the value is rounded at the level of the individual good to the nearest four decimal places of the Dirham upon registration with the FTA. The Due Tax for periodic returns is rounded to the nearest Fils using standard arithmetic rounding.
Common Mistakes in Sweetened Drinks Excise Tax Compliance
Relying on nutrition labels rather than accredited laboratory reports is the most common error — the FTA requires formal laboratory testing, not self-reported data. Failing to count naturally occurring sugars alongside added sugars understates the sugar content. Treating restaurant-prepared beverages as automatically exempt without verifying they are served in open containers for direct consumption creates risk. Failing to re-test products when formulations change can result in incorrect category classification.
Why Choose Abdelhamid & Co for Sweetened Drinks Tax Advisory
Our team guides beverage businesses through the full classification process: initial product assessment, laboratory report coordination, FTA price list registration, and ongoing compliance reviews as formulations change. We also handle reconsideration requests for businesses that believe the FTA has misclassified their products.
Frequently Asked Questions
What is the sweetened drinks excise tax rate in the UAE from 2026?
From 1 January 2026, sweetened drinks are taxed per litre: AED 1.09 for drinks with 8g or more sugar per 100ml, AED 0.79 for 5-8g per 100ml, and AED 0 for drinks under 5g sugar or with only artificial sweeteners, per Cabinet Decision No. 197 of 2025.
Are diet drinks subject to excise tax in the UAE?
Sweetened drinks containing only artificial sweeteners (no sugar or other sweeteners) are taxed at AED 0 per litre — effectively exempt. However, a laboratory report from an accredited lab proving the absence of sugar is required. Without it, the FTA applies the highest rate.
How is excise tax calculated on sweetened drink concentrates in the UAE?
Under FTA Decision No. 10 of 2025, the Dilution Ratio is calculated as: total sugar content (grams) × 20 ÷ volume/weight of concentrate unit. The final drink volume determines which sugar tier applies. An accredited laboratory report must confirm the sugar content.
Are fresh juices from restaurants subject to sweetened drinks excise tax?
Beverages prepared in restaurants or similar establishments and served in open, unsealed containers for direct consumption are excluded from the sweetened drinks definition per Article 7(5)(f) of Cabinet Decision No. 197 of 2025. Pre-packaged drinks sold in restaurants are not excluded.
What laboratory report is needed for sweetened drinks excise tax classification?
A report from a laboratory accredited per the Ministry of Industry and Advanced Technology's published list, showing total sugar, other sweeteners, and artificial sweetener content. Without this report, Article 13(4) of Cabinet Decision No. 197 requires the FTA to apply the highest tax category.
Related Services
- Excise Tax Return Filing — monthly return preparation with correct product categorisation
- Tax Agency Service — ongoing FTA liaison and compliance management
- Voluntary Disclosure — correct prior misclassification before audit
Last reviewed: