Ministry of Finance and Federal Tax Authority Announce Amendment to Excise Tax on Sugar Sweetened Beverages Through Introduction of a Tiered Volumetric Model

UAE, July 18, 2025

The Ministry of Finance and the Federal Tax Authority (FTA) have announced an amendment to the excise tax mechanism applied to sugar sweetened beverages (SSB’s), introducing a tiered volumetric model that links the tax value on each litre of a sugar sweetened beverage to its sugar content per 100ml. The higher the sugar content per 100ml, the higher the tax per litre, marking a shift from the flat rate currently applied to these beverages.

This amendment is part of the UAE’s broader efforts to promote public health, reduce the consumption of high-sugar products, and encourage manufacturers to lower sugar levels in their beverages.

The announcement follows a proactive approach aimed at providing suppliers, importers, and stakeholders sufficient time to prepare for the upcoming changes. This includes updating internal systems, reviewing product formulations, and ensuring that their records with the Federal Tax Authority are aligned with the requirements of the enhanced model.

The updated mechanism is scheduled to take effect at the beginning of 2026, pending the issuance of the relevant implementing legislation.

The Ministry of Finance stated that this enhanced model reflects the UAE’s commitment to adopting flexible financial and legislative tools that promote healthy lifestyles. Unlike the previous model, which was based on product classification, the new system ties the tax rate directly to the level of sugar content, and by extension, to the associated health impact.

This approach incentivises manufacturers to reduce sugar levels and empowers consumers to make more informed dietary choices.

This direction also supports efforts to strengthen Gulf-wide tax policy integration and reinforces the use of taxation as a strategic tool to advance sustainable development goals. The Ministry confirmed that comprehensive awareness campaigns will be launched—jointly with the Federal Tax Authority and relevant health and regulatory entities—to ensure a smooth transition and full readiness across the business ecosystem once the legislative tool is in place.

Notably, the system was developed in close coordination with the Ministry of Health and Prevention to ensure alignment with national health objectives and to deliver measurable improvements in dietary consumption patterns.

Businesses across the UAE will be granted sufficient time to prepare for the implementation of the new mechanism. Additional details will be announced in the coming period to support businesses in achieving full compliance with the updated policy.