The Ministry of Finance has issued a new Cabinet Decision that will overhaul how excise tax is applied to sweetened beverages in the UAE, introducing a tiered system based on sugar content in an effort to support public health goals.
Cabinet Decision No. 197 of 2025 replaces the previous 2019 framework and establishes a clearer legislative structure for defining excise goods and their applicable tax rates. The update is aligned with recent amendments to the Excise Tax law and is designed to help taxable businesses better understand and meet their compliance obligations.
Under the new tiered volumetric model, beverages will be taxed according to the amount of sugar per 100 milliliters. Products containing between 5 and 8 grams of sugar will be taxed at AED0.79 per liter, while those with 8 grams or more will incur a tax of AED1.09 per liter. Drinks with less than 5 grams of sugar per 100 milliliters and those using only artificial sweeteners will be exempt.
The decision also outlines procedures by the Federal Tax Authority for classifying products and adding them to the official price list. If producers fail to submit required laboratory reports, taxes will be applied based on the highest sugar category until proper documentation is provided.
All changes related to the new model will take effect on January 1, 2026. The Ministry stated that the amendments reinforce the UAE’s commitment to improving public health, reducing sugar-related health risks, and ensuring a transparent and unified tax system for both consumers and investors.
News Source: Emirates News Agency
