Sweetened drinks excise: what the 1 January 2026 model actually means

The UAE moved sweetened drinks from a flat percentage model to a tiered volumetric model with effect from 1 January 2026. Ten months in, we still see tax summaries quoting the old "50% on all sweetened drinks" headline. That is no longer the rule. Here is how the current model works, who it affects and where to read the authoritative text.

From percentage to volume + sugar

Under the previous framework, sweetened drinks and carbonated drinks were subject to excise at a flat percentage of the taxable price. From 1 January 2026, sweetened drinks are instead taxed by volume, with rates set according to sugar content per 100 ml. The tax is calculated on the litres of product placed on the UAE market, not the retail price.

This is a different calculation model in two respects. First, the tax base is physical volume, so pricing changes no longer move the tax. Second, reformulation matters: a product with lower sugar per 100 ml moves into a lower tier, which gives producers and importers a direct incentive to reduce sugar content.

The tiers at a high level

The controlling instrument, Cabinet Decision 197 of 2025 (Article 8), sets three broad categories for sweetened drinks:

• High-sugar tier. Products with at least 8 grams of sugar per 100 ml attract the highest per-litre rate.
• Medium-sugar tier. Products with at least 5 grams and less than 8 grams of sugar per 100 ml attract a lower per-litre rate.
• Low/zero-sugar tier. Products below the low threshold are not charged at the sweetened-drinks volumetric rate, subject to definitions and exclusions.

We have deliberately not quoted exact figures here because we have seen a published discrepancy between the FTA topic page and the Cabinet Decision PDF on the middle-tier rate. Until that is clarified in public guidance, the right source is the Cabinet Decision text, read with legal input. If an adviser quotes you an exact per-litre figure, ask which document and which article they are reading.

Who needs to pay attention

• Importers of sweetened drinks. Volumes per SKU and sugar-per-100 ml figures (from product technical sheets) are now the inputs to your excise calculation.
• UAE producers and bottlers. Reformulation decisions have a direct tax consequence. Product changes should be reviewed against the tier boundaries.
• Distributors and large wholesalers. Even where the tax is accounted for upstream, inventory and pricing reconciliations need to reflect the new model.
• Restaurant and hospitality operators. Certain restaurant-served open-container drinks have distinct treatment under the decision. Do not assume every drink on a menu attracts excise at the packaged-import rate.

Transition points to recheck

For businesses already registered for excise, three practical checks are worth running before year-end:

1. Product master. Every sweetened drink SKU should have a sugar-per-100 ml figure that maps cleanly to a tier. If the product master has old "excise 50%" codes with no volumetric data, that needs to be fixed before December returns.
2. Imports evidence. Customs documentation now matters more because the tax is per-litre. Invoices that show cases rather than litres should be reconciled to a litre figure consistently.
3. Pricing memo. If you repriced in January 2026 to account for the new model and the market has moved, a short memo showing how the current retail price reconciles to the current excise is useful if the FTA asks.

Energy drinks, tobacco and other excise goods are unchanged

The 2026 amendment specifically changes sweetened drinks. Tobacco products, energy drinks and the other excise categories continue under their existing rules. If you are preparing a cross-category excise return, the sweetened-drinks lines are the ones where the data model has changed; the other lines should run as they did in 2025.

Monthly filing continues

Excise returns remain due monthly, by the 15th of the following month. The due date and payment process are unchanged. What has changed is the detail that goes into the sweetened-drinks lines: volume and sugar-tier data rather than taxable price and percentage.

Where to read the law

The authoritative sources are the FTA excise topic page on calculating excise, and Cabinet Decision 197 of 2025 as published on the tax.gov.ae legislation page. Both are available in English PDF form. Where there is a visible difference between a topic-page example and the decision itself, work from the decision and flag the discrepancy to your reviewer.

The excise glossary entry is the shortest overview we publish. If you would like a scoped review of your product master and import evidence against the current tiers, our tax advisory team can quote that as a short engagement.

Sources: Cabinet Decision 197 of 2025 (as published on the tax.gov.ae legislation page); FTA excise topic page on calculating excise tax. Reviewed 28 October 2026. This article is informational; specific product tiers, exclusions and per-litre figures should be checked by a qualified reviewer before you rely on them for a return or a reformulation decision.