FTA Decision No. 10 of 2025 (effective 1 January 2026) establishes the official mechanism for calculating the percentage of sugar and other sweeteners in concentrates, powders, gels, and extracts for UAE excise tax purposes when producer guidelines are unavailable or proven inaccurate. The mechanism uses a Dilution Ratio formula derived from laboratory analysis of the concentrated product unit. Without this calculation, concentrates default to the highest excise tax rate of AED 1.09 per litre under Cabinet Decision No. 197 of 2025. Abdelhamid & Co (FTA TAAN 20033908) assists beverage manufacturers and importers with laboratory report sourcing, Dilution Ratio calculations, and FTA classification submissions.
Why the Concentrate Calculation Mechanism Matters
Cabinet Decision No. 197 of 2025 introduced a three-tier excise tax structure for sweetened drinks based on sugar content per 100ml of the final ready-to-drink product: zero rate (under 5g/100ml), AED 0.79/litre (5–8g/100ml), and AED 1.09/litre (8g or more/100ml). For ready-to-drink products, the sugar content on the product label is typically sufficient for classification. For concentrates, powders, gels, and extracts, classification is more complex — the sugar content must be assessed on the basis of the final product form (after dilution), not the undiluted concentrate.
Article 10(2) of Cabinet Decision No. 197 of 2025 specifies that for concentrates, the sugar quantity is calculated based on the final product form per the producer's guidelines. However, where such guidelines are unavailable, or where guidelines are proven inaccurate, Article 10(2) directs the FTA to determine the calculation mechanism. FTA Decision No. 10 of 2025 is that mechanism — and it applies from 1 January 2026 for all concentrate-form sweetened drinks entering the UAE excise system.
The FTA Decision No. 10 Calculation Mechanism — Step by Step
Under Article 2(1) of FTA Decision No. 10 of 2025, where producer guidelines for a concentrated product are unavailable or inaccurate, the following calculation applies:
| Step | Action | Formula |
|---|---|---|
| Step 1 | Obtain Laboratory Report on the Unit of Concentrated Product | Report must show total amount of sugar and other sweeteners (grams) in the unit |
| Step 2 | Calculate Volume of Final Drink | Volume of final drink (ml) = Total sugar/sweeteners in grams × 20 |
| Step 3 | FTA calculates Dilution Ratio | Dilution Ratio = Volume of final drink (ml) ÷ Volume/weight of Concentrated Product unit (ml or g) |
| Step 4 | Classify the product | Apply Dilution Ratio to determine sugar per 100ml of final drink → assign tier |
The key formula is: Volume of final drink = (total sugar and sweeteners in grams, as shown by the Laboratory Report) × 20. This formula uses the principle that a 5g/100ml sugar concentration in the final drink (the zero-rate threshold) corresponds to 1g of sugar per 20ml of final drink, which the FTA uses as the baseline multiplier. The Dilution Ratio tells the FTA (and the taxable person) how much final drink one unit of the concentrate produces, enabling classification of the concentrate by the sugar content of the final product it creates.
Key Definitions Under FTA Decision No. 10 of 2025
Article 1 of FTA Decision No. 10 of 2025 introduces the following defined terms, which are specific to the concentrate calculation regime:
- Concentrated Products: Concentrates, powders, gels, and extracts that can be converted into Sweetened Drinks
- Unit of Concentrated Product: The packaging unit of a Concentrated Product, whether in the form of a bottle, can, packet, or any other packaging unit
- Dilution Ratio: The volume in millilitres of the final ready-to-drink product resulting from each 1ml or 1g of the Concentrated Product after dilution by water or any other components
- Laboratory Report: A document relating to the content of sugar, other sweeteners, and artificial sweeteners in Sweetened Drinks, issued by an accredited laboratory per the list published by the Ministry of Industry and Advanced Technology
Exclusions from the Concentrate Calculation Mechanism
Article 2(2) of FTA Decision No. 10 of 2025 provides two automatic classification exclusions that bypass the full dilution ratio calculation:
- If the concentrated product is in liquid form and the Laboratory Report shows total sugar and sweeteners below 5g per 100ml, the product is automatically classified under the Low-Sugar Category (zero rate) without applying the dilution formula
- If the Laboratory Report shows the concentrated product contains only artificial sweeteners, the product is automatically classified under the Artificially Sweetened Category (zero rate)
These exclusions recognise that liquid concentrates with sub-5g/100ml sugar already satisfy the zero-rate threshold at their concentrated form — the dilution calculation would only produce a lower concentration at the final product stage, confirming zero-rate treatment. Similarly, entirely artificially-sweetened concentrates produce zero-rate final drinks regardless of dilution.
Laboratory Report Requirements and Accreditation
The Laboratory Report required under FTA Decision No. 10 of 2025 must come from a laboratory accredited per the list published by the Ministry of Industry and Advanced Technology. Importers and manufacturers of concentrated sweetened drink products must obtain these reports for each product line before the first excise return is filed. The report must specifically show: the total amount of sugar and other sweeteners in grams in the Unit of Concentrated Product; whether the product contains artificial sweeteners; and, where the product is in liquid form, the sugar content per 100ml of the concentrate itself. Article 13(4) of Cabinet Decision No. 197 of 2025 confirms that without this report, the FTA applies the highest tier rate (AED 1.09/litre).
Excise Price for Concentrates — Ministerial Decision No. 1 of 2025
Ministerial Decision No. 1 of 2025 (issued 3 January 2025) provides rules for the Excise Price of concentrates, powders, gels, or extracts that can be transformed into sweetened drinks. Where the concentrate is mixed with another product by the retailer, the Excise Price is the higher of: the FTA's published standard price list price (if applicable); or the Designated Selling Price to the retailer declared by the importer or producer, after deducting the tax included therein. This differs from the standard consumer-facing retail price mechanism and reflects the business-to-business nature of wholesale concentrate transactions.
Why Choose Abdelhamid & Co for Concentrate Classification Compliance
We advise beverage manufacturers and importers on the full classification process under FTA Decision No. 10 of 2025: identifying which products require the dilution ratio mechanism, sourcing accredited laboratories, reviewing Laboratory Reports for completeness, calculating Dilution Ratios, and submitting the required documentation to the FTA. Our compliance review service includes a specific concentrate product assessment for businesses with multi-tier sweetened drink portfolios.
Frequently Asked Questions
How is sugar content calculated for UAE excise tax on concentrates and powders?
Under FTA Decision No. 10 of 2025 (effective 1 January 2026), where producer guidelines are unavailable or inaccurate, a Laboratory Report is obtained on the concentrated product unit. The volume of the final drink is calculated as: total sugar in grams × 20. The FTA then calculates the Dilution Ratio = Final drink volume ÷ Concentrate unit volume/weight. This Dilution Ratio is used to classify the product into the correct sweetened drink tax tier.
What happens if a producer does not submit a laboratory report for their concentrate products?
Under Article 13(4) of Cabinet Decision No. 197 of 2025 and FTA Decision No. 10 of 2025, if the required laboratory report is not submitted, the FTA will apply the highest sweetened drink tax rate (AED 1.09 per litre, the High-Sugar Category rate) to the concentrate product. The correct rate applies only after submission of a qualifying laboratory report proving the actual sugar content.
Does FTA Decision No. 10 of 2025 apply to all concentrates or only those without producer guidelines?
The FTA Decision No. 10 mechanism applies specifically where the producer's guidelines for the amount of sugar in a concentrated product are either unavailable or proven to be inaccurate. Where valid and accurate producer guidelines exist, the sugar calculation for concentrate products follows those guidelines directly under Article 10(2) of Cabinet Decision No. 197 of 2025, without needing the dilution ratio formula.
Are there any automatic zero-rate exclusions for liquid concentrates under FTA Decision No. 10?
Yes. Under Article 2(2) of FTA Decision No. 10 of 2025, two types of concentrates are automatically zero-rated without applying the full dilution formula: (1) liquid-form concentrates where the Laboratory Report shows sugar content below 5g per 100ml of the concentrate itself, and (2) concentrates that contain only artificial sweeteners (no sugar of any type).
Which laboratory must issue the report for the UAE excise tax concentrate calculation?
Under FTA Decision No. 10 of 2025, the Laboratory Report must be issued by a laboratory accredited according to the list published by the Ministry of Industry and Advanced Technology. Importers and manufacturers should verify that their laboratory of choice is on this approved list before commissioning testing for excise tax classification purposes.
Related Services
- Compliance Review — concentrate product classification assessment and Dilution Ratio verification
- Excise Tax Return Filing — monthly returns for sweetened drink and concentrate importers
- Reconsideration Requests — challenge FTA product tier classification decisions
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