Key Changes at a Glance
Sweetened Drinks - New Tiered Tax System
The most significant change affects sweetened beverages, which will now be taxed based on sugar content rather than a flat rate. This revolutionary approach incentivizes healthier product formulations and provides clearer guidelines for manufacturers and importers.
📋 Important Exemptions
Several beverage categories are exempt from the sweetened drinks classification, regardless of sugar content:
Beverages containing at least 75% milk or milk substitutes
Baby formula and specialized baby food products
Products for medical or special dietary purposes
Drinks prepared and served in open containers for direct consumption
Unchanged Tax Rates (100%)
The following product categories will continue to be taxed at the existing 100% rate:
- 🚬 Tobacco and tobacco products100%
- 💨 E-cigarette liquids and devices100%
- ⚡ Energy drinks100%
What This Means for Your Business
- Conduct a comprehensive review of your entire product portfolio
- Determine the exact sugar content of all sweetened beverages in your range
- Obtain certified laboratory reports proving sugar levels for each product
- Update pricing strategies and cost structures before January 2026
- Review supply chain and procurement processes for compliance
- Prepare for price adjustments across beverage categories
- Ensure proper product labeling with accurate sugar content information
- Train staff on new tax classifications and compliance requirements
- Update point-of-sale systems to reflect new pricing structures
- Communicate changes to customers proactively
Critical Compliance Requirement
Products without proper laboratory certification will automatically be taxed at the highest rate (AED 1.09 per litre) until the required documentation is provided to the Federal Tax Authority. Ensure all testing and certification is completed well in advance of the January 2026 deadline.
📊 Pricing Calculation Method
The excise price will continue to be calculated using the established methodology:
The higher value of:
- FTA published standard price list, OR
- Designated retail price minus the tax component
This ensures fair and consistent pricing across all market channels and prevents undervaluation.
