UAE Approves New Excise Tax on Sweetened Drinks as Corporate Tax Compliance Surges
<p>The <strong>Federal Tax Authority (FTA)</strong> has approved a <strong>new operational policy for excise tax on sweetened drinks</strong>, introducing a more health-focused, <strong>sugar-based taxation model</strong> that directly links tax rates to the amount of sugar in beverages. The decision comes as the UAE records remarkable success in its <strong>corporate tax rollout</strong>, achieving one of the <strong>highest compliance rates globally</strong>.</p><p>The announcement followed the latest FTA Board meeting, chaired by <strong>Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum</strong>, First Deputy Ruler of Dubai, Deputy Prime Minister, Minister of Finance, and Chairman of the FTA. Sheikh Maktoum praised the continued progress of the UAE’s tax system, noting that it has become “a cornerstone of financial sustainability and an engine for global competitiveness.”</p><h3><strong>Health-Focused Excise Tax on Sweetened Beverages</strong></h3><p>The new <strong>tiered volumetric excise tax system</strong> will apply different rates depending on the <strong>sugar content per beverage unit</strong>, a move aimed at encouraging <strong>healthier consumption habits</strong> and reducing sugar intake nationwide.</p><p>According to the FTA, this policy shift is part of the UAE’s broader strategy to <strong>promote public health</strong> and align with international best practices in combating lifestyle-related diseases such as diabetes and obesity.</p><p>The <strong>Authority is developing new electronic systems and awareness campaigns</strong> to ensure a smooth transition to the new framework before full implementation. These systems will allow beverage manufacturers, distributors, and retailers to calculate and file excise tax electronically with greater accuracy and transparency.</p><p>Industry experts expect the reform to influence consumer behavior, encouraging manufacturers to <strong>reduce sugar content in their products</strong> to qualify for lower tax brackets, similar to successful sugar-tax policies in countries like the UK and Saudi Arabia.</p><h3><strong>Record Corporate Tax Registrations and High Compliance</strong></h3><p>In the same meeting, the FTA reviewed a comprehensive report on <strong>corporate tax implementation</strong>, revealing a strong response from businesses across all sectors.</p><p>As of <strong>September 2025</strong>, the number of corporate tax registrants had surpassed <strong>651,000</strong>, underscoring the UAE’s reputation for regulatory efficiency and corporate compliance.</p><p>FTA officials attributed the milestone to the success of the <strong>‘EmaraTax’ digital platform</strong>, which enables seamless registration, filing, and payment. The platform, introduced to simplify the tax process, now processes thousands of submissions daily, even during high-volume periods.</p><blockquote><p>“The high level of compliance is a testament to the UAE’s digital-first approach and effective communication with the business community,” the FTA noted in a statement.</p></blockquote><p>The report also highlighted a significant increase in <strong>on-time filings</strong>, <strong>accurate annual declarations</strong>, and <strong>timely tax payments</strong>. Nationwide awareness campaigns and online workshops have played a vital role in educating businesses about the requirements and benefits of compliance.</p><h3><strong>Tax Compliance Figures at a Glance (as of September 2025)</strong></h3><p><strong>Corporate tax registrants:</strong> 651,000</p><p><strong>VAT registrants:</strong> 547,000</p><p><strong>Excise tax registrants:</strong> 1,777</p><p><strong>Registered tax agents:</strong> 806</p><p>The FTA also announced that <strong>Dh115.4 million in VAT refunds</strong> were approved for UAE citizens building new homes during August and September — part of the country’s ongoing initiative to support Emiratis in achieving homeownership.</p><h3><strong>E-Invoicing and Digital Transformation Updates</strong></h3><p>Sheikh Maktoum also reviewed progress on the <strong>Joint E-Invoicing Project</strong>, a collaboration between the <strong>Ministry of Finance</strong> and the <strong>FTA</strong>. The system, expected to go live in 2026, will digitize the invoicing process across businesses, reducing paperwork, minimizing fraud risk, and ensuring real-time reporting of transactions.</p><p>The project supports the government’s <strong>“Zero Digital Bureaucracy” initiative</strong>, aimed at <strong>fully digitizing public services</strong> to improve efficiency and user experience.</p><p>During the session, the Board endorsed the FTA’s <strong>2026 budget</strong> and approved several resolutions related to <strong>operational policies, administrative improvements, and tax enforcement standards</strong>.</p><h3><strong>Sheikh Maktoum: Sustaining Modernisation and Transparency</strong></h3><p>Sheikh Maktoum emphasized the importance of sustaining digital transformation and service excellence within the tax ecosystem. He commended the FTA’s proactive approach in simplifying tax procedures and ensuring that businesses — large and small — can easily comply with regulations.</p><blockquote><p>“Our tax framework supports financial sustainability and contributes to the UAE’s long-term growth strategy,” Sheikh Maktoum said. “The focus remains on innovation, efficiency, and trust — the foundations of a modern tax system.”</p></blockquote><p>With the success of corporate tax registration, the UAE has positioned itself as a <strong>global benchmark for effective tax administration</strong>. The country’s clear, transparent, and digitally enabled framework continues to strengthen investor confidence while supporting public services and economic diversification.</p><h3><strong>The Road Ahead: Smarter, Healthier, and More Transparent Taxation</strong></h3><p>As the UAE prepares to roll out its new <strong>sugar-linked excise tax</strong>, both consumers and businesses are expected to benefit from <strong>clearer, fairer, and more health-conscious policies</strong>.</p><p>At the same time, the surge in <strong>corporate tax compliance</strong> underscores the private sector’s confidence in the UAE’s stable regulatory environment and efficient governance model.</p><p>From <strong>AI-driven tax platforms</strong> to <strong>blockchain-backed e-invoicing</strong>, the UAE’s ongoing transformation shows that its tax system is not just about revenue — it’s about building a <strong>sustainable, transparent, and digitally advanced economy</strong> for the future.</p>