UAE Excise Tax on Energy Drinks and Sweetened Beverages 2026 — Tiered Rates Under Cabinet Decision No. 197

UAE excise tax on energy drinks is 100% of the Excise Price and on sweetened beverages is a tiered specific amount — AED 0.79 per litre for drinks containing 5–8 grams of sugar per 100ml, and AED 1.09 per litre for drinks containing 8 grams or more per 100ml — under Cabinet Decision No. 197 of 2025 (effective 1 January 2026). Drinks with less than 5 grams of sugar per 100ml and artificially-sweetened-only drinks carry a zero rate. Abdelhamid & Co (FTA TAAN 20033908) assists importers, producers and distributors with product classification, laboratory reporting, and monthly excise return compliance.

Legal Framework — Cabinet Decision No. 197 of 2025

Cabinet Decision No. 197 of 2025 (effective 1 January 2026) replaced Cabinet Decision No. 52 of 2019 and introduced the current tiered excise tax structure for sweetened beverages. The Decision was issued under Federal Decree-Law No. 7 of 2017 on Excise Tax (as amended by Federal Decree-Laws No. 7 and No. 17 of 2025). The new tiered rate system for sweetened drinks replaces the previous flat 50% rate, introducing a sugar-content-based graduated structure for the first time.

Energy Drinks — Definition and 100% Tax Rate

Under Article 6 of Cabinet Decision No. 197 of 2025, energy drinks are defined as: any beverages marketed or sold as an energy drink that may contain stimulant substances providing mental and physical stimulation — including caffeine, taurine, ginseng, and guarana — and any substances with an identical or similar effect to the aforementioned. The definition also covers any concentrates, powders, gels, or extracts that can be transformed into an energy drink. The tax rate on energy drinks is 100% of the Excise Price — the same rate as tobacco and electronic smoking devices.

The definition is marketing-and-substance based, not purely ingredient-based. A product marketed as providing "energy" or "stimulation" that contains one or more of the listed stimulant substances will typically fall within this category. Businesses that produce or import beverages containing caffeine or similar stimulants should carefully assess whether their product may be characterised as an energy drink, as misclassification carries significant penalty exposure.

Sweetened Drinks — Definition and Tiered Rate Structure

Under Article 7 of Cabinet Decision No. 197 of 2025, sweetened drinks are defined as any product to which a source of sugar, artificial sweeteners, or any other sweeteners has been added, 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. The definition expressly covers concentrates and powders in their pre-diluted form.

The tiered specific-amount tax structure under Article 10 of the Decision is:

Sugar Calculation Rules — Including Natural Sugar

Article 10(3) of Cabinet Decision No. 197 of 2025 specifies that if a sweetened drink contains naturally occurring sugar in addition to added sugar or other sweeteners, the quantity of naturally occurring sugar must be calculated within the total quantity of sugar or other sweeteners. This means that a fruit juice or other beverage with naturally present sugars plus any added sweetener will have its natural sugar included in the sugar count for tier classification purposes — potentially pushing it into a higher tax tier than its added-sweetener content alone would suggest.

For concentrates, powders, gels, and extracts, the sugar quantity is calculated based on the final product form in accordance with the producer's guidelines. Where guidelines are unavailable or proven inaccurate, FTA Decision No. 10 of 2025 (effective 1 January 2026) provides a specific mechanism: the taxable person must obtain a Laboratory Report from an accredited laboratory showing the total sugar content of the concentrated product unit; the FTA then calculates the Dilution Ratio using the formula: Dilution Ratio = Volume of final drink ÷ Volume/weight of Concentrated Product unit.

Excluded Products — What Is NOT a Sweetened Drink

Article 7(5) of Cabinet Decision No. 197 of 2025 sets out the exclusions from the sweetened drink definition. These exclusions are narrow and specific:

• Beverages containing at least 75% milk of the ready-to-drink volume
• Beverages containing at least 75% milk substitutes of the ready-to-drink volume (milk substitutes must contain at least 120mg calcium per 100ml and be extracted from pulses, cereals, nuts, seeds, or other plants — no aerated substances)
• Baby formula, follow-up formula, or baby food
• Beverages for special dietary needs (per GCC Standard 654)
• Beverages for medical uses (per GCC Standard 1366)
• Beverages with added sweeteners prepared in restaurants or similar establishments, served in open, unsealed containers for direct consumption

Importantly, Article 8 of the Decision carves out drinks containing alcohol from both the energy drink and sweetened drink categories entirely. Alcoholic beverages — regardless of sugar or stimulant content — are not subject to excise tax under the energy drink or sweetened drink categories.

Laboratory Report Requirement for Sweetened Drinks Classification

Under Article 13(4) of Cabinet Decision No. 197 of 2025, the person importing or producing sweetened drinks is obligated to submit a laboratory report — accepted by the FTA and issued by an accredited laboratory — proving the quantity of sugar and other sweeteners in the drink and whether it contains artificial sweeteners. If this report is not submitted, the FTA will impose tax at the highest category (AED 1.09/litre) on the relevant drink. Tax will be accounted for under the correct category only after a qualifying laboratory report is submitted proving lower classification. This is a critical compliance requirement that importers must address before the first excise return is filed.

Previously Taxed Goods — No Double Taxation

Article 9 of Cabinet Decision No. 197 of 2025 addresses a specific scenario relevant to restaurants, cafés, and retailers: if an excise good (falling under Articles 6 or 7 — energy drinks or sweetened drinks) has previously been subject to tax in the UAE, the beverage produced by combining that taxed good with other products at the selling point for consumption by a non-taxable person is not considered an excise good and no further tax is due. However, the tax paid on the original taxed ingredient cannot be claimed as Deductible Tax under Article 16 of the Decree-Law.

Why Choose Abdelhamid & Co for Beverage Excise Tax Compliance

We provide classification analysis for energy drink and sweetened drink products, laboratory report review, Excise Price calculations, and monthly return management. For products close to tier boundaries, we assist with FTA laboratory accreditation queries and the documentary requirements of the compliance review process. We also handle reconsideration requests for FTA decisions on product classification.

Frequently Asked Questions

Related Services

• Excise Tax Registration — for new beverage importers or producers entering the UAE market
• Excise Tax Return Filing — monthly return management for beverage companies
• Reconsideration Requests — challenge FTA product classification decisions

Last reviewed: 26 May 2026