Federal Tax Authority Clarifies New “Tiered Volumetric Model” for Applying Excise Tax on Sweetened Drinks

Concerned Parties Urged to apply for Accredited Conformity Certificates regarding the sugar and sweetener content in beverages (for Excise Tax purposes).
Awareness and Support to Business Sectors for Smooth Transition to Mechanism Expected to be Implemented at Beginning of 2026

Abu Dhabi, 29 October 2025: The Federal Tax Authority (FTA) has called on producers, importers, and stockpilers of sugar-sweetened drinks to begin reviewing the sugar content in their products in preparation for implementing the new excise tax mechanism on sweetened drinks.

The transition to this mechanism is expected to take effect from the beginning of 2026, following the anticipated issuance of the legislation that defines the rules and frameworks for its application.

The mechanism will primarily rely on a “Tiered Volumetric Model”, which links the excise tax imposed per litre of sweetened drinks to the sugar content per 100 ml.

The FTA emphasised that early preparation would contribute to a smooth transition in applying the excise tax mechanism on sweetened drinks based on the “Tiered Volumetric Model”, noting that once the legislation regulating the mechanism comes into force, those subject to excise tax will be required to register sweetened drinks as excise goods after submitting a certified laboratory report accredited by the Ministry of Industry and Advanced Technology (MoIAT), showing the sugar and sweeteners content as supporting documentation, or be classified as a high-sugar sweetened drinks.

As part of efforts to raise awareness about the new mechanism for calculating Excise Tax on sweetened drinks, its objectives, requirements, and the method for determining the sugar and other sweetener content in such drinks, comprehensive information has been made available in a clear and user-friendly manner on the Federal Tax Authority’s website. It can be accessed via the link: Excise tax according to a tiered-volumetric model

The Authority called on producers, importers and stockpilers of sweetened drinks to expedite their applications for UAE conformity certificates issued by the MoIAT regarding the sugar and sweetener content in beverages (for Excise Tax purposes)., which shows the sugar and sweeteners content in their products, and identify their proportions, in preparation for the implementation of the mechanism for calculating excise tax on sweetened drinks. This is based on a lab report issued by one of the laboratories accredited by official accreditation bodies in the UAE, such as the National Accreditation Department, the Emirates National Accreditation System, or by any laboratory certified under ISO/IEC 17025.

The FTA noted that excise taxpayers may apply for the “UAE Certificate of Conformity regarding the sugar and sweetener content in beverages (for Excise Tax purposes)”.”, through simple and clear electronic steps. This certificate specifies the total sugar content (including natural sugars, added sugars, and other sweeteners) in sweetened drinks that are produced, imported, stored, or released from a designated area, and indicates whether the sweetened drinks contain artificial sweeteners.

The Authority further clarified that, once the regulations come into effect, any sweetened drink not covered by a valid UAE Certificate of Conformity will automatically be classified as a high-sugar beverage until an authorised laboratory report is submitted confirming that its sugar content falls below the threshold defined for this category.

The FTA issued a Public Clarification last September outlining the expected amendments to the excise tax application mechanism on sweetened drinks. The Public Clarification can be accessed via the link: “Excise Tax Public Clarification - Transition to a tiered-volumetric model of Excise Tax for Sweetened Drinks.”

The FTA stated that issuing this Public Clarification is part of its ongoing commitment to awareness and support to business sectors, enabling them to prepare for the transition within a reasonable timeframe to ensure compliance with the mechanism, and avoid any negative impact on their operations.

The FTA emphasised its commitment to grant suppliers, importers, and other stakeholders sufficient time to prepare for applying the mechanism by reviewing their product compositions, updating their records with the FTA, and ensuring operational readiness, following the issuance of the relevant legislation and procedural framework.

The FTA further clarified that, under the rules expected to take effect in early 2026, a sweetened drink will be defined as a product to which a source of sugar, artificial sweeteners or other sweeteners is added that is produced for consumption as a drink, whether ready to drink, in the form of concentrates, powders, gels, extracts, or any form that can be converted into a sweetened drink.

The “Tiered Volumetric Model” will be applied to calculate the excise tax on sweetened drinks, based on sugar or sweeteners content rather than a fixed rate, as currently applied.

According to the FTA’s Public Clarification, Excise Tax will be calculated based on the total sugar content (natural sugar, added sugar, and other sweeteners) in the drink, if the drink contains added sugar or other sweeteners (such as honey). However, drinks that contain only natural sugar without any added sugar or sweetener will not be subject to excise tax.

The clarification noted that, according to the “Tiered Volumetric Model”, drinks containing only artificial sweeteners, without added sugar or other sweeteners, will be subject to 0% excise tax.

Notably, as part of the excise tax mechanism, carbonated drinks will be abolished as a separate category of excise goods. Instead, the applicability of excise tax on carbonated drinks will be determined based on their sugar content and categorisation as sweetened drinks. Energy drinks will continue to be subject to the existing excise tax of 100% of the excise price and will not be subject to the “Tiered Volumetric Model”.

The Public Clarification indicated that under the rules, sweetened drinks will be classified as follows:

• High-sugar drinks containing 8g or more of total sugar and other sweeteners, per 100 ml.
• Moderate-sugar drinks containing 5g or more but less than 8g of total sugar and other sweeteners, per 100 ml.
• Low-sugar drinks containing less than 5g of total sugar and other sweeteners, per 100 ml.
• Sweetened drinks that contain only artificial sweeteners.