The Ministry of Finance and the Federal Tax Authority have announced a modification to the implementation mechanism of the excise tax on sweetened beverages. This change involves transitioning to a “tiered volumetric model” that links the tax amount charged per liter of sweetened drink to the sugar content per 100 milliliters.
As the sugar content in each 100 milliliters increases, the tax imposed per liter will also rise, moving away from the current flat rate applied to these beverages.
This adjustment is part of the government’s efforts to promote public health, reduce the consumption of high-sugar products, and encourage manufacturers to lower sugar levels in their beverages.
The announcement of this policy comes with a proactive approach, intended to provide suppliers, importers, and other stakeholders with sufficient time to prepare for the upcoming changes.
This preparation includes updating their internal systems, reviewing product formulations, and adjusting their records with the Federal Tax Authority to comply with the requirements of the new model until official regulations are issued. The updated mechanism is set to take effect in early 2026.
The Ministry of Finance emphasized that this revised model reflects the country’s commitment to adopting flexible financial and legislative tools that support healthy lifestyles by linking the new tax system to the health impacts associated with sugar levels in the product, rather than relying solely on its classification.
Furthermore, the ministry indicated that this initiative is aimed at supporting Gulf integration in tax policies and enhancing the use of taxes as an effective tool for achieving sustainable development goals.
Comprehensive awareness campaigns will be launched to assist with the transition and ensure businesses are adequately prepared for the actual implementation once the legislative framework is adopted, in collaboration with the Federal Tax Authority and health and regulatory bodies.
It is noteworthy that the development of this system was carried out in coordination with the Ministry of Health and Community Protection, ensuring alignment with national health objectives and achieving a tangible positive impact on food consumption patterns.
Businesses will be provided ample time to prepare for the updated mechanism, with further details regarding the new system to be announced in the coming months to support companies in readiness and ensure full compliance with the new policies.