UAE to roll out sugar-based tax on sweetened drinks

Abu Dhabi: The United Arab Emirates (UAE) will implement a new sugar-content-based excise tax on sweetened beverages starting January 2026, the Ministry of Finance and the Federal Tax Authority (FTA) announced on Friday, July 18.

The move is part of a broader strategy to promote healthier consumption habits and reduce sugar intake across the population.

Under the revised model, the tax will no longer be applied at a flat 50 percent rate. Instead, it will be calculated based on the sugar content per 100ml—meaning products with higher sugar levels will be taxed more heavily, while those with reduced sugar may be subject to a lower rate.

Incentivising healthier choices

The initiative aligns with the UAE’s long-term strategy to promote better dietary habits and curb the rise of lifestyle-related diseases such as diabetes and obesity. By financially incentivizing healthier options, authorities hope to nudge both consumers and manufacturers toward more health-conscious choices.

“The revised framework reinforces our commitment to public health and sustainable well-being,” the Ministry said in a statement. “We’re leveraging fiscal policy to support long-term national health goals.”

Gradual transition with industry Ssupport

The announcement comes 18 months ahead of implementation, offering businesses ample time to adapt. Manufacturers, importers, and retailers are expected to review product formulations, upgrade systems, and ensure compliance with the new requirements.

To ease the shift, the FTA will roll out targeted awareness campaigns and training programs. Specific tax brackets based on sugar thresholds will be detailed ahead of enforcement.

Building on previous reforms

This initiative builds on a series of health-focused fiscal policies introduced since 2017. That year, excise duties were first applied to carbonated drinks, energy beverages, and tobacco products. In 2019, the scope was expanded to include sweetened beverages and e-cigarettes.

Developed in coordination with the Ministry of Health and Prevention, the new mechanism reflects a science-based approach to policymaking. It also strengthens the UAE’s position among nations using taxation to drive sustainable health outcomes.