29 July 2026 · Sugar Tax
The 2026 Tiered Sugar Tax
From 1 January 2026, sweetened drinks are taxed by sugar content per 100ml rather than a flat 50%: under 5g is untaxed, 5 to under 8g is AED 0.79 per litre, and 8g or more is AED 1.09 per litre, under Cabinet Decision No. 197 of 2025. The tiers apply product by product and are never averaged across a range, so one high-sugar SKU cannot hide behind a portfolio of low-sugar drinks. If the sugar content is not certified with an accepted laboratory or conformity certificate, the highest tier applies by default. Lower-sugar drinks now carry meaningfully less tax, which makes reformulation a direct pricing lever rather than just a health message.
Exiloz Management & Tax Consultant · Dubai-based FTA-focused advisory · VAT, corporate tax & accounting
Three sugar bands
The reform replaces the old flat 50% excise on sweetened drinks with a volumetric model that scales with sugar content per 100ml. The three bands are fixed thresholds set by Cabinet Decision No. 197 of 2025, and they took effect on 1 January 2026 alongside the rest of the UAE's excise framework under Federal Decree-Law No. 7 of 2017.
- Under 5g sugar per 100ml: AED 0, untaxed.
- 5g to under 8g per 100ml: AED 0.79 per litre.
- 8g or more per 100ml: AED 1.09 per litre.
- Replaces the old flat 50% rate on sweetened drinks.
- Effective 1 January 2026 under Cabinet Decision No. 197 of 2025.
Certify or pay the top tier
The rate is not something you can estimate or self-declare informally. Each product needs its own evidence of sugar content, and the default position without that evidence is expensive.
- Tiers apply product by product, never averaged across a range.
- No accepted certificate means the highest tier applies automatically.
- A laboratory or conformity certificate is the standard form of evidence.
- Re-certify whenever a recipe or supplier formulation changes.
- Keep certificates on file to support each excise return.
What the tiers cost on real volume
The tiers are easiest to understand against real numbers. Take a Dubai 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. Reformulate the same drink to 7g per 100ml and it drops into the middle tier at AED 0.79 per litre, cutting the bill to AED 79,000 — a saving of AED 30,000 a year on a single SKU. Get it under 5g per 100ml, or switch to an artificial-sweetener-only formula, and the excise on that product disappears.
- 100,000L/year at 10g/100ml (top tier): AED 109,000 a year.
- Same volume reformulated to 7g/100ml (middle tier): AED 79,000 a year.
- Same volume under 5g/100ml: AED 0 excise.
- A missing certificate on a genuine middle-tier product still costs the top-tier rate.
Where the tiered model comes from
UAE excise tax is levied under Federal Decree-Law No. 7 of 2017, with the original excise goods and 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 that flat rate with the tiered volumetric model described above, effective 1 January 2026.
- Federal Decree-Law No. 7 of 2017: the excise tax law itself.
- Cabinet Decision No. 52 of 2019: original excise goods and rates.
- Cabinet Decision No. 197 of 2025: the 2026 tiered sugar reform.
- Tobacco, energy drinks and e-smoking products are unaffected by the reform and stay at 100%.
Related guides
Frequently Asked Questions
For beverage importers, producers and anyone pricing a sweetened-drink range under the new tiers.
What are the 2026 sugar-tier rates?
Under 5g of sugar per 100ml is untaxed (AED 0); 5 to under 8g is AED 0.79 per litre; and 8g or more is AED 1.09 per litre. The bands are fixed thresholds and apply to each product individually.
When did the tiered model start?
1 January 2026, under Cabinet Decision No. 197 of 2025, replacing the previous flat 50% excise on sweetened drinks that had applied since Cabinet Decision No. 52 of 2019.
What if I don't certify sugar content?
The highest tier — AED 1.09 per litre — applies by default. On meaningful volume that gap adds up fast, so certifying each product with an accepted laboratory or conformity certificate is a direct cost saving, not just a compliance formality.
Can Exiloz help price for the tiers?
Yes. We classify each product's sugar content against the bands, model the per-litre excise cost at your actual volumes, and help you plan certification and pricing before the tax hits your margin.
Can I average sugar content across my product range?
No. The tiers are applied product by product. A low-sugar drink in your range cannot offset a high-sugar one — each SKU is assessed and taxed on its own sugar content.
Does the tier apply to imported and locally produced drinks equally?
Yes. The tiered rate applies regardless of whether the sweetened drink is imported or produced in the UAE — the trigger is bringing the product into consumption, not where it was made.
Are drinks with only artificial sweeteners taxed?
Drinks that contain only artificial sweeteners and no sugar fall in the untaxed band, since the tiers are measured by grams of sugar per 100ml rather than sweetness generally. This makes sweetener-only reformulation a genuine way to remove the excise from a product.
How often should I re-certify a product's sugar content?
Whenever the recipe, supplier or formulation changes. A certificate reflects the product as tested, so a reformulated drink needs a fresh certificate before you can rely on anything other than the default top tier.
Does the tiered model apply to all sweetened drinks, or only sodas?
It applies to sweetened drinks generally, not just carbonated sodas — that includes flavoured waters, juice-based drinks with added sugar, and other sweetened beverages, as long as they are not covered by the separate energy-drink category or the natural-juice exemption. Each product still needs to be classified individually.
How is the per-litre tier calculated on a small pack size, like a 250ml can?
The rate is expressed per litre, so it is applied proportionally to the actual volume of the product — a 250ml can at the AED 1.09-per-litre tier carries roughly a quarter of that rate. The sugar band is still assessed per 100ml of the product's recipe, regardless of pack size.
What if a drink contains both natural fruit juice and added sugar?
If sugar or a sweetener has been added at any point, the natural-juice exemption no longer applies, and the product is assessed under the sweetened-drink tiers based on its total sugar content per 100ml, not just the naturally occurring portion from the juice.
Master the sugar tiers
Exiloz classifies your drinks against the 2026 sugar bands, models the per-litre cost at your volumes, and plans certification so you are not defaulted into the top tier.