The UAE has introduced a major change to its excise tax framework by implementing a tier-based sugar-content excise system for sweetened beverages.
Understanding how the UAE Sugar Tax 2026 works is essential for manufacturers, importers, distributors and retailers to ensure proper compliance and avoid penalties.
This guide explains the objectives behind the new system, taxable beverages, tier rates, filing requirements, documentation rules and how businesses can adapt processes to remain fully compliant with Federal Tax Authority (FTA) regulations.
What is the UAE Sugar Tax 2026?
The UAE Sugar Tax 2026 replaces the previous 50% excise on sweetened drinks with a volume-and-sugar-based model, directly linking tax to sugar concentration.
This policy was introduced to:
- Discourage consumption of high-sugar beverages
- Promote healthier consumer habits
- Encourage product reformulation
- Align UAE with international best practices (UK, Singapore, KSA)
- Provide a fairer tax structure where sugar content drives liability
Tiered Sugar-Based Rates (Per Litre)
Under the UAE Sugar Tax 2026, beverages are taxed according to grams of sugar per 100ml:
| Sugar Content per 100ml | Tier | Excise Rate |
|---|---|---|
| ≥ 8g | High sugar | AED 1.10 per litre |
| 5g – 7.99g | Medium sugar | AED 0.80 per litre |
| < 5g | Low sugar | AED 0 |
| 0g (including artificial sweeteners) | Zero sugar | AED 0 |
| Energy drinks (any sugar level) | Special category | 100% of retail price |
Key Differences vs Previous System
- Tax no longer tied to selling price
- Discounts or promotional pricing do not reduce tax
- Reformulating products to reduce sugar lowers tax exposure
- Manufacturers gain control over long-term tax impact
Which Products Fall Under UAE Sugar Tax 2026?
- Taxable Products
- Regular & diet carbonated beverages
- Flavoured & sparkling waters
- Sports/isotonic drinks
- Ready-to-drink teas & coffees
- Juice drinks containing sugar or concentrates
- Powder mixes & syrups (taxed on final diluted volume)
- Blends using both sugar and artificial sweeteners
Exempt Categories
- 100% natural fruit juices without added sugar
- Plain dairy and milk-based drinks
- Infant formula
- Medical and therapeutic nutrition
- Made-to-order beverages in restaurants/cafés
Important:Products labelled “no added sugar” may still be taxable if total sugar exceeds threshold after dilution or includes naturally sweet concentrates.
How to Determine Sugar Tax Liability
To calculate excise under the UAE Sugar Tax 2026, businesses must:
1.Verify Product Eligibility
Confirm presence of sugar or sweeteners.
2.Obtain Sugar Concentration Data
Laboratory testing must determine sugar per 100ml.
3.Assign Correct Tier
- ≥ 8g → AED 1.10/L
- 5–7.99g → AED 0.80/L
- < 5g → AED 0
- Zero sugar → AED 0
- Energy drinks → 100% tax
4.Calculate Excise Payable
Volume (litres) × Applicable Tier Rate
5.Add VAT
5% VAT applies after excise is added to product cost.
Examples
- 330ml soda @ 9g sugar → AED 0.36 excise
- 500ml sports drink @ 6g sugar → AED 0.40 excise
- 1.5L zero-sugar → AED 0 excise
Compliance & Documentation Requirements
Businesses must maintain verified evidence supporting sugar-tier classification, including:
- MOIAT-approved laboratory sugar analysis certificates
- SKU-by-SKU excise product registration
- Tier classification records
- Proof of final reconstitution volume for concentrates
- Labelling and formula specifications
FTA Audit Focus Areas
- Missing or expired lab test reports
- Incorrect tier assignment
- Understated volume calculations
- SKU not registered before import or sale
No laboratory certificate = automatic highest tier + penalties
Impact on Businesses
The UAE Sugar Tax 2026 shifts compliance responsibility further upstream, affecting:
- Manufacturers — Reformulate to reduce cost
- Importers — Certify sugar content before clearing goods
- Distributors/wholesalers — Register and classify SKUs
- Retailers — Ensure pricing reflects final excise and VAT
Best Practices for Compliance
To operate smoothly under the new sugar excise model, businesses should:
- Conduct sugar-testing early for all new SKUs
- Maintain a document library for product categories
- Review formulations regularly to stay below thresholds
- Track product volumes in litres — not retail pricing
- Train finance and warehouse teams on procedural changes
How HayyaTax Supports Businesses
Specialised consultants can streamline adoption of the new law by handling:
- Laboratory coordination & verification
- SKU registration & excise filing
- Volume and tier calculation systems
- Reconstitution formulas for powders & syrups
- Strategic sugar reduction analysis
Conclusion
The UAE Sugar Tax 2026 fundamentally changes excise obligations — making sugar content the central driver of cost and compliance.
Businesses that understand tier thresholds, classify products correctly, maintain documentation, and file excise returns accurately will avoid penalties and benefit from consumer demand for lower-sugar offerings.
Proactive planning, accurate testing, and professional support can position beverage businesses as fully compliant and cost-efficient under the new UAE excise regime.