UAE overhauls excise tax on sugary drinks to boost health and economy

The UAE Ministry of Finance has finalized a set of legislative amendments to integrate the updated excise tax policy on sugar-sweetened beverages into national law, aligning with the GCC's adoption of a tiered volumetric tax model.

The revised policy is scheduled to take effect on January 1, 2026.

The amendments are designed to provide a solid legal and regulatory framework that supports the smooth rollout of the new tax system across the country. The tiered model will classify beverages based on their sugar content or the presence of other sweeteners, creating a more precise taxation mechanism that reflects consumption patterns and health impact.

Under the new framework, taxable entities that have imported or produced goods subject to the current 50 percent excise tax before the amendments take effect - and whose tax liability is reduced as a result - will be allowed to deduct part of the previously paid tax, ensuring a balanced transition.

The Ministry said the updated legislation aims to foster a competitive and transparent tax environment while maintaining alignment with broader GCC fiscal policies. It added that the approach supports economic stability, enhances trust between the government and taxpayers, and advances the UAE's fiscal and public health goals.

With these amendments, the UAE continues its efforts to modernize its financial system through a proactive and flexible policy framework that encourages sustainable economic growth and healthier consumption choices.

News Source: Emirates News Agency