The Ministry of Finance has announced the issuance of Cabinet Decision No. (197) of 2025, introducing significant amendments to the UAE’s excise tax regime through the implementation of a tiered volumetric model for sweetened beverages. The decision replaces Cabinet Resolution No. (52) of 2019, together with its subsequent amendments.
The new framework forms part of the UAE’s broader public health strategy and follows the recent amendments to Federal Decree-Law No. (7) of 2025 on Excise Tax. It establishes a unified legislative approach to the classification of excise goods and the calculation of applicable tax rates, offering greater clarity for taxable persons and supporting consistent compliance.
Under the revised model, excise tax on sweetened beverages will be calculated according to sugar content per 100 millilitres. Beverages containing 5 grams or more but less than 8 grams of sugar will be taxed at AED 0.79 per litre, while those containing 8 grams or more will be subject to AED 1.09 per litre. Products with less than 5 grams of sugar per 100 millilitres, as well as beverages sweetened exclusively with artificial sweeteners, will be exempt. Thus, the tax bands apply on a volumetric basis (AED per litre) by reference to the product’s sugar content per 100 ml as substantiated by approved supporting documentation.
Scope and exclusions:
The tiered volumetric model applies to “sweetened beverages”, including soft drinks and other drinks containing added sugar and/or sweeteners. Certain product categories are excluded from classification as sweetened beverages for the purposes of this model including: (i) energy drinks (which remain subject to a separate excise category), (ii) beverages containing 75% or more milk or milk substitutes, (iii) baby formula and infant foods, (iv) beverages for specific dietary and/or medical needs, and (v) beverages prepared for non-commercial consumption or served in open containers for direct consumption (e.g., made and served in restaurants).
Beverages made entirely of 100% natural juices (e.g., orange, apple, pineapple) are not classified as sweetened beverages even where natural sugar content exceeds 5g/100 ml, provided no sugar or sweeteners are added.
The decision also sets out the Federal Tax Authority’s procedures for product classification and pricing, including the treatment of cases where laboratory reports or supporting documentation are not submitted. In such circumstances, tax will be applied based on the highest sugar content category, subject to later adjustment upon submission of an approved laboratory report. Accordingly, businesses should ensure timely availability of accredited laboratory certificates / classification support to avoid default high-tier treatment.
All amendments related to the tiered volumetric model will take effect on 1 January 2026.
These changes underscore the government’s continued commitment to encouraging healthier consumption habits while providing a clear and predictable excise tax framework that supports both businesses and investors.
Our team can assist with the implications of these changes, including compliance and product classification under the new excise tax framework. For further information, please contact Vida Grace Serrano at vida@alsuwaidi.ae and Suneer Kumar at suneer@alsuwaidi.ae.