UAE's Sugar-Based Drink Tax from 2026

New Tax Rule for Sweetened Drinks – Based on Sugar Content from 2026

The United Arab Emirates is introducing a new taxation regulation for sweetened drinks, which will come into effect at the beginning of 2026. According to the announcement from the Federal Ministry of Finance and the Federal Tax Authority, the imposed tax amount in the future will be determined not by the category of the drinks, but by the quantity of sugar they contain. This change aims to encourage manufacturers to reduce the sugar content of their products, thus offering a healthier choice to consumers.

What exactly is changing?

Previously, a uniform banded tax rate applied to sweetened drinks – regardless of how much sugar they contained. In contrast, the new model uses a differentiated approach: the higher the drink's sugar content, the higher the tax will be. This regulation applies not only to soft drinks but also to various flavored drinks, energy drinks, and other products containing added sugar.

The objective: supporting healthier choices

Health considerations are behind the decision. In recent years, the UAE government has launched several campaigns to reduce sugar consumption, given its long-term negative effects such as obesity, diabetes, and cardiovascular diseases. Through the new tax model, the government creates a clear incentive: manufacturers can reduce their product prices if they reduce the sugar content – indirectly allowing the population access to healthier products.

Time for transition

The authorities wisely provide a preparation period of more than a year for the affected parties. The timing of the announcement allows manufacturers, suppliers, importers, and distributors to transition their systems, modify their product formulations, and adapt to the new tax calculation method. The change affects not only local businesses but also international brands that rely on exports.

Economic and consumer impacts

The introduction of sugar content-based taxation may initiate a price competition in favor of drinks with lower sugar content in the long run. It is expected that premium brands will develop new product lines, while cheaper products will be forced to replace sugar with alternative sweeteners to remain competitive. Consumers are likely to receive more information about the ingredients of drinks and make more informed decisions during purchases.

Summary

The UAE's new regulation is a milestone in connecting healthy nutrition with tax policy. By tying the tax amount to the sugar content of products, the government sends a clear message: public health is a priority. The change may pose a challenge for market players but also creates opportunities for innovation and more responsible product development – all in the interest of protecting consumers' health.

(Source of the article: Ministry of Finance and Federal Tax Authority statement.)