UAE Excise Tax 2026: New Sugar Tax Tiers & Rates

• 29 July, 2026
• By Safvan, Managing Partner
• Tax Compliance

The year the UAE sugar tax got smarter

There is no registration threshold for UAE excise tax. It applies to specific harmful goods whatever your turnover, so any producer, importer or stockpiler must register with the FTA. Rates: tobacco 100%; energy drinks 100%; electronic-smoking devices and liquids 100%; and, from 1 January 2026, sweetened drinks moved from a flat 50% to a tiered volumetric model tied to sugar content. Under Cabinet Decision No. 197 of 2025: under 5g sugar/100ml is untaxed, 5–8g is AED 0.79 per litre, and 8g or more is AED 1.09 per litre.

The 2026 shift from a flat rate to a per-litre, sugar-based tax is the biggest excise change in years, and it rewards lower-sugar reformulation. If you import, produce or stock drinks in Dubai, here is what changed and what you must do.

The 2026 tiered sugar tax

The thresholds are fixed and applied product by product. They are not averaged across a range. Crucially, if you cannot evidence a product’s sugar content with an accepted laboratory/conformity certificate, the highest tier applies by default, so getting each product certified matters commercially.

A worked example: what the tiers cost an importer

Take a Dubai beverage importer bringing in 100,000 litres a year of a cola with 10g of sugar per 100ml. At the top tier of AED 1.09 per litre, the annual excise bill is AED 109,000. If the supplier reformulates the recipe to 7g/100ml, the product drops into the middle tier at AED 0.79 per litre and the bill falls to AED 79,000, a saving of AED 30,000 a year on one SKU. Get the same drink under 5g/100ml, or switch to an artificial-sweetener-only formulation, and the excise disappears entirely. That is a real lever, but not a free one. Dropping sugar or moving to sweeteners changes the product, and some brands will judge the taste and shelf positioning not worth the AED saved. The tax math is only half the decision.

Now run the numbers the other way. Suppose the importer also carries a mid-sugar juice drink at 6g/100ml, genuinely a middle-tier product, but never obtains the laboratory or conformity certificate to prove it. The default rule bites: the product is taxed at the top tier, AED 1.09 per litre instead of AED 0.79. On 100,000 litres, that missing piece of paper costs AED 30,000 a year. Certification is not an administrative nicety under the 2026 model. It is a direct line on your margin.

The other excise goods (still 100%)

One classification trap worth flagging: a low-sugar energy drink does not drop into the sweetened-drink tiers. Energy drinks are their own excise category at 100% of the excise price, whatever their sugar content. The per-litre model applies only to sweetened drinks. Classifying each product into the right category is therefore the first step, before any tier analysis, and misclassifying an energy drink as a tiered sweetened drink is an expensive error to unwind in a later FTA review.

Who must register

There is no turnover threshold for excise tax. Any business that imports, produces or stockpiles excise goods in the UAE must register with the FTA before dealing in them. In practice, this catches the small operator off guard. We regularly see a Dubai café or grocery importing its own energy drinks or syrups, comfortably under the AED 375,000 VAT line, that still had to register for excise before its first shipment.

Registration and returns: the process step by step

1. Confirm your trigger: if you import, produce or stockpile any excise good, even one product line, you must register, regardless of turnover.
2. Classify every product into its category: tobacco, energy drink, electronic-smoking device or liquid, or sweetened drink, and for sweetened drinks its sugar tier.
3. Register on EmaraTax with the FTA before you first deal in the goods, providing your business details and the excise goods you handle.
4. Obtain laboratory/conformity certificates for each sweetened-drink product, so the correct tier applies instead of the default top tier.
5. File periodic excise returns declaring the goods released for consumption and pay the tax due on time.
6. Keep inventory and movement records, including for stock held in excise designated-zone warehouses under suspension.

If you are already VAT-registered, excise is a separate registration with its own returns. One does not cover the other. Businesses handling both often run them through the same bookkeeping engine; our Dubai tax registration service handles the FTA side, and our accounting team keeps the product-level records the returns depend on.

Stockpiling: the trap around a rate change

A rate change is exactly when the stockpiling rules matter most. Holding excess excise goods when rates move can bring that existing inventory into charge. So a distributor sitting on a warehouse of high-sugar stock across the 1 January 2026 switchover needed an accurate, dated inventory count to know what tax attached to it. The same discipline applies going forward: goods held in FTA-approved excise designated-zone warehouses stay under duty suspension until released for consumption, which makes clean movement records the difference between paying excise once, correctly, and arguing about it in an audit. The concept mirrors the VAT treatment of fenced zones, which we cover in our VAT designated zones guide.

Key dates and figures for 2026

That last row matters: from 14 April 2026, excise penalties sit inside the unified administrative-penalty regime of Cabinet Decision No. 129 of 2025, which harmonises VAT, excise and tax-procedures penalties. Late registration, late returns and record-keeping failures each carry their own consequences under that framework, so a small importer who assumed excise was “too small to matter” can accumulate several distinct exposures at once.

Common mistakes Dubai F&B businesses make

What Dubai F&B businesses should do

1. Classify every product: is it an excise good, and at what rate/tier?
2. Certify sugar content: get lab/conformity certificates to avoid the top tier.
3. Register with the FTA: before importing, producing or stockpiling.
4. Price and reformulate: lower-sugar drinks now carry less tax.
5. File excise returns: and manage designated-zone stock and records.

The legal basis

UAE excise tax is levied under Federal Decree-Law No. 7 of 2017 on Excise Tax, with the excise goods and their original rates (including the old flat 50% on sweetened drinks) set by Cabinet Decision No. 52 of 2019. The 2026 reform arrives through Cabinet Decision No. 197 of 2025, which replaces the flat rate on sweetened drinks with the tiered volumetric model from 1 January 2026: AED 0 under 5g of sugar per 100ml (or artificial-sweetener-only drinks), AED 0.79 per litre from 5g to under 8g, and AED 1.09 per litre at 8g or more. Tobacco, energy drinks and electronic-smoking products stay at 100%. Administrative penalties across excise, VAT and tax procedures are harmonised by Cabinet Decision No. 129 of 2025 from 14 April 2026. If your product range touches any of those categories, a classification and certification review before your next shipment is the cheapest compliance step you will take this year.

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