UAE Retailers Must Prepare for New Sugar-Based Drink Tax: FTA
UAE Retailers Must Prepare for New Sugar-Based Drink Tax: FTA
The Federal Tax Authority (FTA) has called on all UAE companies involved in producing, importing, or storing sweetened drinks to begin reviewing the sugar and sweetener content of their products. The move comes ahead of the introduction of a new sugar-based excise tax system that will link tax rates directly to a drink’s sugar level.
The updated taxation model, called the “Tiered Volumetric Model,” will take effect in early 2026, following the final issuance of legislation. Unlike the current flat-rate excise tax, the new system will impose different tax rates depending on the amount of sugar or sweeteners in each beverage.
How the New Sugar-Based Tax Will Work
Under the upcoming model, drinks will be classified and taxed according to sugar content per 100 millilitres, as follows:
High-sugar drinks: 8g or more → Highest excise tax rate
Moderate-sugar drinks: 5g–8g → Medium tax rate
Low-sugar drinks: Less than 5g → Lowest or zero tax
Artificially sweetened drinks: 0% tax if they contain no added sugar
The FTA clarified that the tax applies to all beverages containing added sugar or sweeteners, including:
Concentrates
Syrups
Powders
Gels and extracts used to make drinks
However, drinks containing only natural sugars (with no added sweeteners) will not be taxed.
Energy drinks will continue to be taxed separately at 100% of the excise value.
Certification Now Required for All Sweetened Drinks
To register beverages under the new tax system, companies must obtain an Accredited Conformity Certificate from the Ministry of Industry and Advanced Technology (MoIAT).
This certificate verifies the exact sugar or sweetener content of a product based on laboratory tests conducted by an approved testing facility.
Key details include:
Certification is mandatory for producers, importers, and stockpilers.
Products without certification will automatically be taxed as high-sugar drinks until lab results prove otherwise.
Certificates can be obtained by submitting test reports from ENAS-accredited or ISO/IEC 17025-certified labs.
Applications can be completed online via the MoIAT digital platform, where companies can upload their lab reports and receive certificates listing total sugar content and artificial ingredient status.
Early Preparation Strongly Advised
The FTA has urged businesses to act early to ensure smooth compliance when the new tax takes effect. Early certification will help avoid delays in registration, potential penalties, or misclassification of products.
In a Public Clarification issued in September 2025, the FTA explained the reasoning behind this shift — to encourage manufacturers to reduce sugar content, promote healthier consumer choices, and streamline taxation under a unified system.
The new model also aligns with the UAE’s broader efforts to combat lifestyle-related diseases, support sustainable consumption, and enhance transparency in the food and beverage sector.
Industry Impact and Next Steps
Retailers, importers, and beverage manufacturers should:
Test products in accredited labs to determine sugar and sweetener levels.
Apply for MoIAT certification well before 2026.
Update product records and labeling in line with new compliance requirements.
Monitor FTA updates and guidance on implementation timelines.
The Federal Tax Authority said it will continue working closely with government entities and private companies to raise awareness, provide technical support, and ensure a smooth transition to the new model.
Summary:
The UAE’s upcoming sugar-based excise tax will make 2026 a pivotal year for beverage makers and retailers. With tax rates tied to sweetness levels, early compliance — through proper certification and testing — will be crucial to avoid higher taxes and ensure a seamless transition.