UAE updates excise tax rules, links sugar levels to higher levies

Dubai: The Ministry of Finance has announced a new Cabinet resolution that updates key parts of the executive regulations governing excise tax in the UAE. The changes are aimed at modernising the system and making it more precise and health-focused.

One of the most notable shifts is how excise tax is applied. The tax is no longer based on a simple flat rate. Instead, it now follows a tiered structure, particularly for sweetened drinks. Products with higher sugar content will face higher excise tax, while those with lower sugar levels will be taxed at reduced rates.

The updated rules also strengthen reporting requirements and introduce clearer laboratory testing standards to verify product ingredients. The Ministry said these measures are designed to improve accuracy, reduce disputes, and ensure better enforcement of the tax.

Certain health-related products are exempt under the revised framework. These include items used to help people stop smoking, reflecting a stronger public health focus within the excise tax system.

In its statement, the Ministry said Cabinet Resolution No. 198 of 2025 amends parts of Cabinet Resolution No. 37 of 2017, which outlines the executive regulation of the Excise Tax Law. The amendments follow recent changes introduced under Federal Decree-Law No. 7 of 2025, which updated several provisions of the excise tax legislation.

According to the Ministry, the changes are intended to align the executive regulations more closely with the updated law. Key areas affected include tax registration, excise tax deductions, and refund requests. The resolution also improves several procedural elements within the existing regulations.

The Ministry of Finance said the updates aim to make compliance easier for businesses, improve clarity around tax obligations, and support a stable business environment. Officials added that the amendments will help strengthen tax compliance, protect public revenues, and support the development of a more efficient and flexible tax system.

The Ministry noted that the changes form part of a broader effort to align the UAE’s tax framework with international best practices, enhancing transparency and efficiency in the application of excise tax nationwide.