UAE Sugar Sweetened Beverage Tax 2026: Rules, Eligible Drinks & Impact

The UAE has introduced a tiered sugar-based excise on beverages since January 1, 2026, taxing drinks per liter by sugar content to cut consumption, drive reformulation, and replace the current flat-rate system across the market.

Key takeaways

• Started Jan 1, 2026, with volumetric excise per liter, replacing the flat 50% tax on sweetened beverages.
• Three sugar tiers drive rates: ≥8g/100ml at AED 1.10/L, 5–7.99g at AED 0.80/L, below 5g at zero.
• Applies to drinks with added sugar or sweeteners; exempts 100% juices, dairy, medical nutrition, and freshly prepared beverages.
• Energy drinks remain at 100% of retail price, outside the sugar tiers, making them the most heavily taxed category.
• Prices now favor low- or zero-sugar options; businesses must test sugar, register products, and reformulate to compete.

What is the UAE Sugar Tax on Beverages?

The UAE sugar tax on beverages is a selective excise tax designed to reduce the consumption of high-sugar drinks and improve public health. The tax was first introduced in 2017, applying a 50% excise on carbonated soft drinks and a 100% tax on energy drinks. In 2019, this was expanded to all sweetened beverages, meaning any drink containing added sugar or sweeteners, at a flat 50% of the retail price. While simple, this system did not differentiate between low- and high-sugar drinks and provided no incentive for manufacturers to reduce sugar levels.

From 2026, the UAE is replacing this flat tax with a more targeted, sugar-content-based system. Key features include:

• Tiered volumetric model, where tax is charged per liter based on sugar content per 100 ml
• Graduated rates, with higher sugar content attracting higher tax
• Broad scope covering ready-to-drink beverages as well as concentrates, syrups, and powders
• Exemptions for 100% natural juices, milk and dairy drinks, medical nutrition, and freshly prepared beverages

UAE Sugar Tax Implementation Timeline

The UAE implemented its updated sugar content-based excise tax on beverages from January 1, 2026. From this date, the new tiered excise system applies, and the previous flat 50% excise tax ends on December 31, 2025.

Key milestones

• July 2025: UAE authorities first announced the shift to a sugar content-based tax.
• October 2025: The Ministry of Finance and Federal Tax Authority officially confirmed January 1, 2026, as the start date and confirmed legislative readiness.
• Late 2025: Legislative amendments were finalized to enable the new excise framework.
• Q4 2025: Transition and preparation period, including product testing, registration updates, and compliance guidance for businesses.

Transitional rule: Beverage stock taxed at 50% in 2025 but remaining unsold on January 1, 2026 may qualify for a refund or deduction if the new tiered tax is lower.

Which Beverages Are Taxed Under the UAE Sugar Tax (2026)?

Any beverage containing added sugar or added sweeteners falls within scope unless specifically exempted. The applicable excise is charged per liter, not as a percentage of price, except for energy drinks.

Key Clarifications

• Volume-based taxation: Excise is charged per liter of beverage, not as a percentage of the selling price. Product price does not affect the excise amount.
• Sugar-driven classification: Sugar content per 100 ml is the only factor used to determine the applicable tax tier.
• Threshold effect: Reducing sugar content to below 5g per 100 ml eliminates excise entirely.
• Sugars vs. artificial sweeteners: All caloric sweeteners (including sugar, honey, syrups, and similar ingredients) count toward total sugar for classification. Artificial sweeteners do not count as sugar and qualify for a 0% excise rate, provided no real sugar is present.
• Mixed formulations: Beverages containing both sugar and artificial sweeteners are taxed based on the actual sugar present. Artificial sweeteners do not offset sugar content.
• Concentrates and powders: Syrups, powders, and concentrates are taxed based on the final reconstituted beverage volume, ensuring consistent treatment across formats.
• Coffee and tea products: Plain brewed coffee or tea is not taxable. Packaged coffee or tea with added sugar is taxable unless it qualifies as a dairy-based beverage. Freshly prepared drinks for immediate consumption remain exempt.
• Energy drinks: Energy drinks are excluded from the tiered sugar system and remain subject to 100% excise on retail price, making them the most heavily taxed beverage category.

UAE Sugar Tax Rate

Until 2025, sugar-sweetened beverages in the UAE were subject to a flat 50% excise tax, calculated as a percentage of retail price. From 2026, this system is replaced by a tiered volumetric excise, where tax is charged as a fixed amount per liter, based solely on sugar content.

Key changes:

• Tax is no longer linked to product price
• Sugar content per 100 ml determines the tax tier
• Energy drinks remain taxed separately at 100% of retail price

The UAE aligns with the GCC sugar-tax framework. The applicable excise rates per liter are as follows:

How the New Sugar Tax Affects Prices

Under the 2026 system the tax is volume-based therefore

• Cheaper, high-sugar drinks may feel more expensive than before
• Premium-priced drinks are less heavily taxed in absolute terms
• Reducing sugar can eliminate excise entirely

Simple Price Examples

• 330 ml high-sugar soda: Excise ≈ AED 0.36 (previously up to AED 0.75 under the 50% system)
• 500 ml moderate-sugar drink: Excise ≈ AED 0.40 (previously AED 2.00)
• 1.5 L zero-sugar drink: Excise AED 0 (previously taxed at 50%)

VAT Still Applies: Excise is added to the base price, and 5% VAT is charged on the total. VAT rules remain unchanged.

How to Calculate Sugar Tax for Beverages

Calculating the sugar tax for a given beverage under the UAE’s 2026 system involves a few steps, but once you know the drink’s sugar content category, it’s straightforward arithmetic. 

Step 1: Confirm tax applicability

The sugar tax applies to beverages with added sugar or added sweeteners. Pure fruit juices with no added sugar, milk and dairy drinks, and other exempt categories are not taxed.

Step 2: Identify sugar content per 100 ml

Use laboratory results or the nutrition label to determine total sugar:

• 8 g or more: High-sugar beverage
• 5 g to 7.99 g: Moderate-sugar beverage
• Less than 5 g: Low-sugar beverage
• 0 g with artificial sweeteners only: Zero-sugar category

Step 3: Apply the correct excise rate

Each sugar category has a fixed rate per liter:

• High sugar: AED 1.10 per liter
• Moderate sugar: AED 0.80 per liter
• Low or zero sugar: AED 0 per liter
• Energy drinks: 100% of retail price

Step 4: Determine the beverage volume

Excise is calculated on total volume sold:

• 330 ml equals 0.33 liters
• 500 ml equals 0.50 liters
• 1.5 liters equals 1.5 liters
• For concentrates or powders, use the volume of the final prepared drink.

Step 5: Calculate the excise amount

Multiply the excise rate by the beverage volume.

Example: A 330 ml high-sugar drink → 0.33 × 1.10 = AED 0.36.

Step 6: Add VAT

The excise amount is added to the base price, and 5% VAT is applied to the total.

Why is the UAE Introducing Sugar Tax (2026)?

The UAE is tightening its sugar-sweetened beverage tax to reduce lifestyle diseases and modernize excise policy. The goal is to make high-sugar drinks less attractive and push the market toward healthier options. 

• Public health pressure: High obesity and diabetes rates increase long-term healthcare burden. Making sugary drinks more expensive helps reduce consumption.
• Behavior changes and reformulation: Tiered rates reward lower sugar. If a drink drops below key thresholds, it can move to a lower or zero-tax tier creating a strong incentive to reformulate.
• Regional alignment: A shared GCC framework reduces loopholes and supports consistent rules across markets.
• Fairer, more sustainable revenue: Excise supports public funding while being more acceptable when it feels proportional (more sugar = more tax).
• Timing: The earlier flat-rate model reduced consumption but didn’t strongly encourage reformulation; the tiered model is designed to fix that.

Impact on Consumers

Consumers mainly feel the change through price differences between high-sugar and low/zero-sugar drinks. The tiered design makes sugar content more visible and turns labeling into a practical decision tool.

Expected consumer effects:

• Price shifts: High-sugar drinks become relatively more expensive, while low-sugar and zero-sugar options become more attractive.
• Label awareness: Shoppers are more likely to check “sugar per 100 ml” because it affects price through the tax tier.
• Changing habits: More switching to diet/zero options and water, preference for smaller pack sizes (lower tax per unit) and short-term stock-up behavior before implementation (possible but temporary)
• Long-term health benefit: Lower sugar intake can support better outcomes over time, even if changes are gradual.

UAE Sugar Tax Rates Compared to Other GCC Countries

Here’s a snapshot of sugar-sweetened beverage (SSB) tax rates in GCC countries:

Conclusion

The 2026 UAE sugar-sweetened beverage regime represents a move toward a more precise and predictable excise structure. Shifting from a flat ad valorem rate to a volumetric, sugar-based levy stabilizes revenue by linking tax to physical volume and composition rather than retail price fluctuations, discounts, or premium positioning. This improves auditability, reduces valuation disputes, and aligns tax liability more closely with the policy objective of penalizing higher sugar intensity.

Administratively, the framework strengthens compliance discipline across the supply chain. Mandatory sugar testing, tier classification, and product registration create clearer tax bases, while per-liter rates simplify forecasting and ERP integration for taxpayers.