A new sugar tax system will take effect on 1 January, 2026, as announced by the UAE's Ministry of Finance (MoF) and the Federal Tax Authority, an initiative to reduce the consumption of sugary and artificially sweetened drinks.
The updated policy will move away from the current flat 50% excise tax imposed on any products with added sugar or other sweeteners, and instead adopt a tiered model based on each beverage’s sugar content.
Under the new system, drinks with higher sugar or sweetener levels will face higher tax rates, while those with lower content will be taxed less. This means soft drink prices could vary depending on how much sugar or artificial sweetener they contain.
The amendments, recently announced by MoF, also include a clear mechanism for tax adjustments, allowing businesses to transition and adapt smoothly before the new law takes effect next year.
The primary aim of the policy is to ensure better health outcomes and also to encourage manufacturers to reduce sugar levels in the products.