UAE Finalises New Sugar-Based Tax Model for Sweetened Drinks, Effective January 2026:

UAE Finalises New Sugar-Based Tax Model for Sweetened Drinks, Effective January 2026 The UAE has now officially disclosed the complete information of its new tax system (tiered volumetric model) for taxing sweetened (sugary) drinks. This model includes the calculation method, rate brackets, and enforcement framework. This simply means the tax will depend on how much sugar is in the drink and how much of it you buy. The new model is scheduled to be effective from January 01, 2026. Earlier this month, the Ministry of Finance had said that the law for this new tax was almost ready. Now, in its latest update, the ministry has confirmed that everything is final. All the rules, how the tax will be calculated, the different tax rates, and how companies must follow the law have been published on official government websites.

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The new circular has given more than enough time to manufacturers, retailers and distributors to adjust supply chains and update product labelling before the effective date of the model. This is the most expected change of the year. In July 2025, the Federal Tax Authority (FTA) stated that, effective from 2026, the taxes on sweet beverages will be calculated on the basis of sugar concentration instead of the type of product; the first announcement came at that time only. This is a bug change in the existing flat 50% excise rate. According to the new model, the sweetened drinks will fall mainly into four categories based on total sugar content. 

Category	Total Sugar Content (per 100 ml)
High-sugar drinks	8g or more
Moderate-sugar drinks	5g or more but less than 8g
Low-sugar drinks	Less than 5g
Artificially sweetened drinks	0g exercise tax

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Drinks containing all-natural sugars will not be taxed. Drinks containing all artificial sweeteners will not be taxed. Now, carbonated beverages will not be considered under a separate excise category; they will be taxed completely depending on sugar content. On the other hand, all the energy drinks will continue to be taxed at 100% of the excise price, which is outside the tiered volumetric model.