New regulations to modernize the nation's excise tax on sugar-filled beverages will go into force on January 1, 2026, according to the UAE Ministry of Finance. The goal of the upgrade is to improve the tax system's efficiency and bring it into compliance with the Gulf Cooperation Council's (GCC) new requirements.
"The UAE Ministry of Finance has announced the completion of a set of proposed legislative amendments to embed the updated excise tax policy into the national legislation," the ministry stated on Monday.
This action is consistent with the GCC's implementation of a tax on sugar-sweetened drinks (SSBs) using a tiered volumetric scheme. With taking effect on January 1, 2026, the modifications seek to create a thorough legal and regulatory framework that guarantees the new policy's seamless countrywide implementation.
The UAE will implement a tiered system in which the tax rate is determined on the amount of sugar or sweetener a drink contains, replacing the previous flat 50% tax on all sugar-sweetened beverages. This new strategy is a component of the GCC's regional beverage taxation policy. Drinks containing more sugar will be subject to greater taxes under the new tiered scheme, while those with less sugar would pay lower taxes. This strategy seeks to incentivize beverage manufacturers to lower the amount of sugar in their goods and provide customers with additional options for selecting healthier beverages.
According to the Ministry, the changes also include a provision for producers and importers who have already paid the 50% excise duty on items before the new system goes into effect. They can deduct a portion of the already paid tax if their tax rate is lower under the new model and the items have not yet been sold.
