UAE's new sugar drink tax to go live on January 1, finance ministry confirms

Dubai: The UAE Ministry of Finance confirmed that new rules to update the country’s excise tax on sugary drinks will take legal effect on January 1, 2026. The update is meant to make the tax system more efficient and aligned with new standards set by the Gulf Cooperation Council (GCC).

"The UAE Ministry of Finance has announced the completion of a set of proposed legislative amendments to embed the updated excise tax policy into the national legislation," the ministry said on Monday.

"This step is in line with the GCC’s adoption of a tiered volumetric model for excise tax on sugar-sweetened beverages (SSBs). The amendments aim to establish a comprehensive legal and regulatory foundation that ensures the smooth implementation of the updated policy at the national level, with effect from January 1, 2026."

Under the changes, the UAE will move from a flat 50% tax on all sugar-sweetened drinks to a tiered system, where the amount of tax depends on how much sugar or sweetener a drink contains. This new approach is part of the GCC’s regional model for taxing sugar-sweetened beverages.

The new tiered model means drinks with more sugar will face higher taxes, while those with less sugar will be taxed at lower rates. This method aims to encourage drink makers to reduce sugar levels in their products and give consumers more options to choose healthier drinks.

The Ministry said the amendments also include a rule for importers and producers who have already paid the current 50% excise tax on goods before the new system starts. If their tax rate is lower under the new model and the goods have not been sold, they can deduct part of the previously paid tax.

The Ministry explained that the changes are part of efforts to keep the UAE’s tax system in line with global best practices and GCC regulations. The goal is to make the system fair, flexible, and easier to manage for both businesses and government authorities.

It also reflects the UAE’s commitment to improving public health. By linking tax rates to sugar levels, the new system aims to reduce sugar consumption and support the country’s broader health and wellness goals, including lowering obesity and diabetes risks.

The Ministry said the proposed changes will strengthen trust in the UAE’s financial system and support a stable and sustainable economy. Businesses will have time to adjust before the new rules come into effect at the start of 2026.

The Ministry added that the amendments are part of its ongoing work to modernize the tax framework, ensuring it stays up to date, efficient, and supportive of the UAE’s long-term fiscal and social objectives.