UAE Retailers Must Prepare for New Sugar-Based Drink Tax: FTA
<h3>UAE Retailers Must Prepare for New Sugar-Based Drink Tax: FTA</h3><p>The <strong>Federal Tax Authority (FTA)</strong> has called on all UAE companies involved in producing, importing, or storing <strong>sweetened drinks</strong> to begin reviewing the <strong>sugar and sweetener content</strong> of their products. The move comes ahead of the introduction of a <strong>new sugar-based excise tax system</strong> that will link tax rates directly to a drink’s sugar level.</p><p>The updated taxation model, called the <strong>“Tiered Volumetric Model,”</strong> will take effect in <strong>early 2026</strong>, following the final issuance of legislation. Unlike the current flat-rate excise tax, the new system will impose <strong>different tax rates</strong> depending on the amount of sugar or sweeteners in each beverage.</p><h3>How the New Sugar-Based Tax Will Work</h3><p>Under the upcoming model, drinks will be classified and taxed according to sugar content per <strong>100 millilitres</strong>, as follows:</p><p><strong>High-sugar drinks:</strong> 8g or more → Highest excise tax rate</p><p><strong>Moderate-sugar drinks:</strong> 5g–8g → Medium tax rate</p><p><strong>Low-sugar drinks:</strong> Less than 5g → Lowest or zero tax</p><p><strong>Artificially sweetened drinks:</strong> 0% tax if they contain no added sugar</p><p>The <strong>FTA</strong> clarified that the tax applies to <strong>all beverages containing added sugar or sweeteners</strong>, including:</p><p>Concentrates</p><p>Syrups</p><p>Powders</p><p>Gels and extracts used to make drinks</p><p>However, drinks containing <strong>only natural sugars</strong> (with no added sweeteners) will <strong>not</strong> be taxed.</p><p>Energy drinks will continue to be taxed separately at <strong>100%</strong> of the excise value.</p><h3>Certification Now Required for All Sweetened Drinks</h3><p>To register beverages under the new tax system, <strong>companies must obtain an Accredited Conformity Certificate</strong> from the <strong>Ministry of Industry and Advanced Technology (MoIAT)</strong>.</p><p>This certificate verifies the <strong>exact sugar or sweetener content</strong> of a product based on laboratory tests conducted by an <strong>approved testing facility</strong>.</p><p>Key details include:</p><p>Certification is <strong>mandatory</strong> for producers, importers, and stockpilers.</p><p>Products <strong>without certification</strong> will automatically be taxed as <strong>high-sugar drinks</strong> until lab results prove otherwise.</p><p>Certificates can be obtained by submitting test reports from <strong>ENAS-accredited</strong> or <strong>ISO/IEC 17025-certified</strong> labs.</p><p>Applications can be completed online via the <strong>MoIAT digital platform</strong>, where companies can upload their lab reports and receive certificates listing total sugar content and artificial ingredient status.</p><h3>Early Preparation Strongly Advised</h3><p>The <strong>FTA</strong> has urged businesses to act early to ensure <strong>smooth compliance</strong> when the new tax takes effect. Early certification will help avoid delays in registration, potential penalties, or misclassification of products.</p><p>In a <strong>Public Clarification issued in September 2025</strong>, the FTA explained the reasoning behind this shift — to encourage manufacturers to <strong>reduce sugar content</strong>, promote <strong>healthier consumer choices</strong>, and <strong>streamline taxation</strong> under a unified system.</p><p>The new model also aligns with the UAE’s broader efforts to <strong>combat lifestyle-related diseases</strong>, support <strong>sustainable consumption</strong>, and <strong>enhance transparency</strong> in the food and beverage sector.</p><h3>Industry Impact and Next Steps</h3><p>Retailers, importers, and beverage manufacturers should:</p><p><strong>Test products</strong> in accredited labs to determine sugar and sweetener levels.</p><p><strong>Apply for MoIAT certification</strong> well before 2026.</p><p><strong>Update product records and labeling</strong> in line with new compliance requirements.</p><p><strong>Monitor FTA updates</strong> and guidance on implementation timelines.</p><p>The <strong>Federal Tax Authority</strong> said it will continue working closely with government entities and private companies to <strong>raise awareness</strong>, provide technical support, and ensure a <strong>smooth transition</strong> to the new model.</p><p><strong>Summary:</strong><br>The UAE’s upcoming <strong>sugar-based excise tax</strong> 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.</p>