The Federal Tax Authority has urged producers, importers, and distributors of sweetened beverages to begin reviewing the sugar and sweetener content in their products in preparation for a new mechanism for calculating excise tax on sweetened drinks. This system is set to be implemented starting in early 2026, with legislative details expected to be released soon. The approach will mainly utilize a “scaled volumetric model” linking the tax imposed per liter of the sweetened drink to the sugar content per 100 milliliters.
To clarify the new tax calculation method for sweetened beverages, its objectives, requirements, and how to ascertain sugar and other sweetener levels, comprehensive information has been made available in a clear and accessible format on the Federal Tax Authority’s website.
In September, the Federal Tax Authority published a general statement outlining the key aspects of the revised excise tax mechanism for sweetened beverages.
Under the anticipated rules, which will come into effect in early 2026, sweetened beverages will be defined as any product containing a source of sugar or artificial sweeteners created for consumption as a drink, whether ready-to-drink or in concentrated, powdered, gel, or extract form, or any format that can be converted into a sweetened drink.
According to the official clarification, the new mechanism will calculate excise tax based on the total sugar content (natural sugars, added sugars, and other sweeteners) if a sweetened beverage contains added sugars or other sweeteners (e.g., honey). However, if the drink contains only natural sugars without added sugars or other sweeteners, the excise tax will not apply.
The new rules will eliminate the classification of soft drinks as a separate category of excise goods. Instead, the tax on soft drinks will be determined based on their sugar content and classification as sweetened beverages. Energy drinks, however, will continue to be subjected to excise tax at the current rate of 100% on the excise price and will not fall under the “scaled volumetric model”.
The general clarification indicates that, according to the new regulations, excise tax on sweetened beverages will be categorized into four groups. The first includes “high-sugar beverages” containing 8 grams or more of total sugar and other sweeteners per 100 milliliters.
The second category is “medium-sugar beverages,” containing between 5 grams and less than 8 grams of total sugar and sweeteners per 100 milliliters.
The third category consists of “low-sugar beverages,” containing less than 5 grams of total sugar and other sweeteners per 100 milliliters. The fourth category includes “beverages sweetened solely with artificial sweeteners.”