Excise Tax on Carbonated Drinks in the UAE: What Changed in 2026

Carbonated drinks stopped being a standalone excise category in the UAE on 1 January 2026. Cabinet Decision No. 197 of 2025 repealed Cabinet Decision No. 52 of 2019 in its entirety and folded fizzy drinks into the sweetened-drinks rules. A carbonated drink is now taxed by its sugar content, or not taxed at all.

Excise tax on carbonated drinks UAE: the 2026 position

Total sugar and other sweeteners per 100ml	Excise charge	Legislative source	Verified
8g or more	AED 1.09 per litre	Cabinet Decision No. 197 of 2025, Article 10(1) item 6	Checked on 4 August 2026
5g or more but less than 8g	AED 0.79 per litre	Cabinet Decision No. 197 of 2025, Article 10(1) item 5	Checked on 4 August 2026
Less than 5g	AED 0 per litre	Cabinet Decision No. 197 of 2025, Article 10(1) item 7	Checked on 4 August 2026
Artificial sweeteners only, or artificial sweeteners plus under 5g of sugar	AED 0 per litre	Cabinet Decision No. 197 of 2025, Article 10(1) item 8	Checked on 4 August 2026
No sugar or sweetener added at all	Outside the sweetened-drinks definition	Cabinet Decision No. 197 of 2025, Article 7(1)	Checked on 4 August 2026
Energy drinks	100% of the excise price — outside the sugar tiers	Cabinet Decision No. 197 of 2025, Article 10(1) item 4	Checked on 4 August 2026
Carbonated drinks as a category	Not listed as an excise good	Cabinet Decision No. 197 of 2025, Article 2	Checked on 4 August 2026
Effective date	1 January 2026	Cabinet Decision No. 197 of 2025, Article 15	Checked on 4 August 2026
Repeal of the old regime	Cabinet Decision No. 52 of 2019 repealed in full	Cabinet Decision No. 197 of 2025, Article 14	Checked on 4 August 2026

Every row above was read this session in the text of Cabinet Decision No. 197 of 2025 as published by the Ministry of Finance and hosted on tax.gov.ae. The published English text is expressly marked as not an official translation. Classification of a specific SKU is the taxpayer’s responsibility — confirm sugar content per 100ml from the product’s own accepted laboratory analysis.

Related reading: UAE excise tax on sweetened drinks 2026 for the wider category, excise tax registration UAE for who must register, the monthly excise tax return in the UAE for filing, and excise duty UAE for how it differs from customs duty.

For years the shorthand was “carbonated drinks are taxed at 50%”. From 1 January 2026 that flat percentage is gone, and so is the category it applied to. Most people now call the replacement the UAE sugar tax, and the nickname is a fair description: sugar per 100ml is the only number that sets the rate on a sugary drink.

The rate is only half the story. You still need to know what counts as a sweetened drink, what is carved out of that definition, what happens when you cannot evidence the sugar figure, who has to register, and how the excise interacts with the 5% VAT that follows it. This guide walks the whole chain so a UAE beverage importer, producer or retailer can see exactly where the tax bites.

Where the published sources disagree, and which one governs

Start here, because a business filing on the wrong source has an exposure it cannot see. Three UAE government sources currently describe this differently.

Source	What it says	Status as read on 4 August 2026
Cabinet Decision No. 197 of 2025, Article 10	AED 0.79 per litre for 5g to under 8g; AED 1.09 per litre for 8g or more; carbonated drinks not a listed excise good	In force from 1 January 2026. Governs.
UAE Ministry of Finance announcement of the tiered volumetric model	AED 0.79 and AED 1.09 per litre; replaces Cabinet Resolution No. 52 of 2019 and its amendments	Consistent with the Decision
FTA excise topic page on calculating tax under the tiered volumetric model	AED 0.97 per litre for the middle band; cites Cabinet Decision No. 52 of 2019 as amended by Decision No. 99 of 2025	Stale as read on 4 August 2026
u.ae excise tax page	Carbonated drinks 50%; sweetened drinks 50%	Stale as read on 4 August 2026; page shows last updated 26 March 2026

All four sources read directly on 4 August 2026. Article 14 of Cabinet Decision No. 197 of 2025 repeals Cabinet Decision No. 52 of 2019 and all provisions conflicting with the Decision, so the Decision governs where a published summary disagrees with it.

If you have been classifying from the FTA topic page or from u.ae, three things are worth doing. Recheck every sweetened-drink SKU against sugar per 100ml. Recompute the excise for periods from January 2026 onward. And where a difference emerges, use the voluntary disclosure route rather than netting it off quietly in a later month.

What the excise regime is actually trying to do

Excise tax is a targeted consumption tax. Where VAT applies broadly across almost all goods and services at 5%, excise deliberately singles out a short list of products the government wants to discourage or price higher because of their health cost. Sweetened beverages and energy drinks sit on that list alongside tobacco and electronic smoking devices.

For a business, the policy intent is background noise. What matters operationally is that once your product is inside the excise list, a specific charge applies, you have to be registered before you act, and you have to file on a monthly cycle. The tax attaches to the product and its sugar content, so the single most important thing you do is classify each SKU and capture its sugar per 100ml correctly.

AED 1.09

Excise tax per litre on high-sugar drinks — 8g or more of sugar and other sweeteners per 100ml — under Article 10(1) item 6 of Cabinet Decision No. 197 of 2025

What actually changed on 1 January 2026

It is worth being precise about the shift, because “the rate changed” undersells it. The category itself was removed.

Element	Before 1 January 2026	From 1 January 2026
Carbonated drinks	A standalone excise good with its own rate	Not a listed excise good; assessed as a sweetened drink if sweetened
How the charge is measured	A percentage of the excise price	A fixed amount per litre by sugar band
The deciding fact	Which product category the SKU sat in	Grams of sugar and other sweeteners per 100ml
Unsweetened sparkling water	Caught by the carbonated-drinks category	Outside the sweetened-drinks definition entirely
Artificially sweetened drinks	Treated with the rest of the category	AED 0 per litre under Article 10(1) item 8
Governing instrument	Cabinet Decision No. 52 of 2019	Cabinet Decision No. 197 of 2025
Energy drinks	100%	100% — unchanged

Comparison drawn from Articles 2, 10 and 14 of Cabinet Decision No. 197 of 2025, checked on 4 August 2026. The “before” column describes the regime that Decision repealed.

The practical consequence for a beverage business is that its SKU classification file is obsolete unless it has been rebuilt around sugar content. A product that was taxable purely because it was fizzy may now be outside the charge; a still, sweetened drink that was previously read as outside the carbonated category may now be squarely inside.

How the sugar-based rates work

The tax is a fixed amount per litre, and the tier is set by how much sugar and other sweeteners the drink contains per 100ml. Getting that figure right is the whole game, because it decides both whether the drink is taxed at all and, if so, at which of the two rates.

This is what people are looking for when they search the sugar tax in the UAE, and the popular name is more accurate than the old one. The UAE sugar tax reaches every sugary drink, not only the fizzy ones — a can of soda, a bottled iced tea and a sweetened juice drink are all read the same way, off the formulation.

8g or more per 100ml — AED 1.09 per litre. The high-sugar tier, where most full-sugar fizzy soft drinks land.

5g to under 8g per 100ml — AED 0.79 per litre. The middle tier, for moderately sweetened drinks.

Under 5g per 100ml — nil. Low-sugar drinks carry no excise, and neither do drinks sweetened only with artificial sweeteners, or with artificial sweeteners plus under 5g of sugar.

Energy drinks — 100%. Article 6 carves energy drinks out of the volumetric model and Article 10(1) item 4 keeps them at the flat 100% rate on the excise price. That is the same headline rate as tobacco, and it means a product wrongly filed as an ordinary soft drink when it is really an energy drink can understate the tax dramatically.

Two definitional points from Article 7 and Article 10 change how you read a nutrition panel.

Point	What the Decision says	Article
What “sugar” means	Any type of sugar determined under GSO Standard 148 under the heading “Sugar”, and subsequent relevant standards	Article 7(2)
What “artificial sweeteners” means	Any type determined under GSO Standard 995, “Sweeteners Permitted in Food”, and subsequent relevant standards	Article 7(3)
What “other sweeteners” means	Any sweetener added for the purpose of sweetening, excluding artificial sweeteners	Article 7(4)
Naturally occurring sugar	Where a sweetened drink contains naturally occurring sugar in addition to added sugar or other sweeteners, the natural sugar is counted within the quantity	Article 10(3)
Rounding	To the nearest four decimal places of the dirham at registration; to the nearest fils for periodic returns	Article 10(4)

Verified against Articles 7 and 10 of Cabinet Decision No. 197 of 2025, checked on 4 August 2026.

Article 10(3) is the one that surprises formulators. A fruit-based fizzy drink with modest added sugar can still land in a higher band once its naturally occurring sugar is counted alongside what was added.

The laboratory report default nobody should trigger

This is the single most expensive provision in the Decision, and it is easy to miss because it sits in the procedural article rather than the rate article.

Article 13(4) obliges the person to submit a laboratory report accepted by the FTA proving the quantity of sugar and other sweeteners in the sweetened drink, and whether it contains artificial sweeteners. If that report is not submitted, tax is imposed on the drink at the category with the highest quantity of sugar and other sweeteners — the AED 1.09 per litre band — with the correct category applied only after an accepted report is produced.

Provision	Effect
Article 13(1)	The FTA may determine the procedures to prove a product’s classification, and may request documents, laboratory tests or other evidence
Article 13(2)	The FTA may determine the procedures for adding a product to the published price list
Article 13(3)	Where documents are not provided within the FTA’s timeframe, the FTA may treat the product as an excise good until proven otherwise
Article 13(4)	Without an accepted laboratory report, the highest sugar band applies; the correct band is applied once a report proving another category is submitted

Verified against Article 13 of Cabinet Decision No. 197 of 2025, checked on 4 August 2026.

Read Articles 13(3) and 13(4) together and the default position of the whole regime becomes clear. Where evidence is missing, the assumption runs against the taxpayer — the product is treated as taxable, and at the highest band. The FTA’s own topic page on the tiered volumetric model also refers to lab testing by the Ministry of Industry and Advanced Technology for sugar content under the model, so the testing route is not something a business improvises.

The operational takeaway is simple. An accepted laboratory report per SKU is not paperwork; it is the difference between AED 0 and AED 1.09 per litre on a low-sugar line.

What is carved out of the sweetened-drinks definition

Not every sweetened beverage is inside the charge. Article 7(5) removes six categories, and Article 8 removes a seventh.

Excluded product	Condition	Article
Milk-based beverages	At least 75% milk of the ready-to-drink beverage	7(5)(a)
Milk-substitute beverages	At least 75% milk substitutes of the ready-to-drink beverage	7(5)(b)
Baby formula, follow-up formula, baby food	No further condition	7(5)(c)
Beverages for special dietary needs	As determined under GSO Standard 654	7(5)(d)
Beverages for medical uses	As determined under GSO Standard 1366	7(5)(e)
Restaurant-prepared sweetened beverages	Served to end consumers in open, unsealed containers for direct consumption	7(5)(f)
Drinks containing alcohol	Excluded from both the energy-drink and sweetened-drink definitions	8

Verified against Articles 7(5) and 8 of Cabinet Decision No. 197 of 2025, checked on 4 August 2026. The milk and milk-substitute tests are defined by reference to the ready-to-drink beverage, and “milk substitutes” has its own definition in Article 1 requiring 120mg of calcium per 100ml and plant origin.

Article 9 adds one more relief worth knowing. Where an excise good under Article 6 or Article 7 has already been subject to tax in the UAE, a beverage produced by combining that good with other products at the selling point, for consumption by a non-taxable person, is not itself an excise good and no further tax is due. The tax paid on those goods cannot then be treated as deductible tax under Article 16 of the Decree-Law.

Concentrates, powders, gels and extracts are inside the net

A crucial detail that catches ingredient importers off guard: the regime does not stop at the finished can. Article 7(1) brings in any form that can be converted into a sweetened drink — concentrate, powder, gel or extract. The logic is anti-avoidance. If only the sealed retail product were taxed, a business could import raw syrup, mix it locally, and sidestep the charge.

Article 10(2) sets the measurement rule. The quantity of sugar or other sweeteners in concentrates, powders, gels and extracts is calculated based on the final product form, in accordance with the producer’s guidelines. Where those guidelines are unavailable or proven inaccurate, the FTA determines the mechanism for calculating the sugar and sweetener percentage.

So a cola concentrate, a sweetened-drink powder, a gel or a flavour extract is assessed on the drink it makes rather than on its own weight. Article 6(2) applies the same logic to energy drinks, pulling in concentrates, powder, gel or extracts that can be transformed into one — and those follow the separate 100% track. Dispenser and fountain operators, beverage manufacturers and ingredient traders all need to run the same discipline as a business importing finished cans.

What the tax is charged on — litres, or the excise price

For carbonated and sweetened drinks the answer is volume. You multiply the per-litre rate for the drink’s sugar tier by the number of litres. There is no percentage and no price base to argue about — a high-sugar litre is AED 1.09 whether it retails cheaply or at a premium.

The excise price concept has not disappeared; it now governs the goods that remain on a percentage rate.

Rule	What Articles 11 and 12 say
Excise price	The higher of the FTA’s published standard price for the good, if available, or the designated retail sales price less the tax included in it
Goods taxed at 100%	The tax included in the designated retail sales price equals half that price
Designated retail sales price	The higher of the recommended retail selling price declared and affixed by importer or producer, less VAT, or the average market retail selling price, less VAT
Hotel and restaurant uplift	Price increases from sale in a hotel or restaurant for on-premises consumption are excluded from the recommended selling price
Concentrates and similar goods	Excise price calculated by a mechanism specified by the Minister

Verified against Articles 11 and 12 of Cabinet Decision No. 197 of 2025, checked on 4 August 2026.

An importer of energy drinks still needs to reconcile declared prices against the current FTA standard-price list, because the base can flip from the declared price to the FTA figure without the business touching a thing. For sweetened drinks, that reconciliation is replaced by a different discipline: an accepted laboratory report and accurate sugar-per-100ml for every line.

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In excise, classification is still the tax decision — the 2026 change just moved the deciding number from a percentage to grams of sugar per 100ml. Capture accurate sugar content for every sweetened SKU, hold the laboratory report that proves it, keep energy drinks on their separate 100% track, and the monthly return becomes arithmetic.

Who must register — importers, producers and stockpilers

Excise registration is triggered by activity, not turnover. The UAE Government portal states plainly that there is no registration threshold for excise tax. Article 2(2) of Federal Decree-Law No. 7 of 2017 lists the activities, and Article 5(1) prohibits conducting any of them before registering.

Group	What triggers the obligation	Where the rule sits
Importers	Bringing excise drinks, or the concentrates and powders that make them, into the UAE	FDL 7/2017, Article 2(2)(b)
Producers	Manufacturing excise drinks in the UAE in the course of business	FDL 7/2017, Article 2(2)(a)
Persons releasing from a designated zone	Releasing excise goods into free circulation	FDL 7/2017, Article 2(2)(c)
Stockpilers	Holding excess excise goods on which tax has not been paid, relieved, remitted or deferred	FDL 7/2017, Article 2(2)(d); CD 37/2017, Article 11
Warehouse keepers	Operating, or intending to operate, a designated zone	CD 37/2017, Article 9(1)
Everyone above	No threshold; registration must precede the activity	u.ae excise page and FDL 7/2017, Article 5(1)

Verified against Federal Decree-Law No. 7 of 2017 and Cabinet Decision No. 37 of 2017, checked on 4 August 2026, and against the UAE Government portal excise page, also read on 4 August 2026.

The stockpiler trap is worth pausing on, because it is a timing problem as much as a classification one. Article 11(2) of the Executive Regulation measures excess excise goods against your own average monthly stock level over the preceding twelve months, and Article 11(3) treats anything above two months of your average monthly sales as excess in full. Article 11(5) then lets the FTA treat your entire stock as excess where audited stock records are not maintained.

Checking your stockpiler status before a large purchase — not after — is the difference between a planned cost and an unwelcome surprise. This is one of the areas where clean bookkeeping and accounting pays off, because your stock records are what evidence your position if the FTA asks.

Monthly filing — a tighter cycle than VAT

Once registered, excise businesses file monthly.

Obligation	Rule	Article
Tax period	The Gregorian month	CD 37/2017, Article 17(1)
Return deadline	No later than the 15th day of the month following the tax period	CD 37/2017, Article 18(2)
Payment deadline	No later than the 15th day following the end of the month	CD 37/2017, Article 19(2)
Import declaration	Details of excise goods to be imported	CD 37/2017, Article 20(1)(a)
Production declaration	Details of excise goods produced in the State	CD 37/2017, Article 20(1)(b)
Designated-zone declaration	Details of excise goods transported from a designated zone	CD 37/2017, Article 20(1)(c)
Late return	AED 1,000 first time; AED 2,000 for a repeat within 24 months	CD 40/2017, Table 1 item 8
Late payment	14% per annum, charged monthly on the unsettled amount	CD 40/2017, Table 1 item 9
Late registration	AED 10,000	CD 40/2017, Table 1 item 3
Prices not shown inclusive of tax	AED 5,000	CD 40/2017, Table 2 item 1

Verified against Cabinet Decision No. 37 of 2017 and the consolidated Cabinet Decision No. 40 of 2017, checked on 4 August 2026.

A monthly return means monthly reconciliation: every import, every production run, every movement of stock has to be captured, classified and priced within the month, not swept up at a quarter-end. The businesses that struggle are the ones treating excise like an annual formality.

Excise first, then VAT on top

The final piece is the interaction between the two taxes, and the order is not optional. Excise is applied first. Then the 5% VAT is charged on the excise-inclusive value. VAT sits on a base that already contains the excise — the two taxes stack, they do not run side by side.

Concretely, a sweetened carbonated drink carries its per-litre excise — AED 1.09 per litre on a high-sugar line — and the 5% VAT is then calculated on the price that already includes that excise. If you left the excise out of the VAT base, charging 5% on the pre-excise price, you would understate the VAT.

This is also why excise and VAT compliance are best handled together rather than in separate silos. The excise number feeds the VAT base directly, so an error in the sugar tier does not stay contained — it flows straight through into the VAT you charge and file. The mechanics of the VAT side are set out in our guide to input VAT and output VAT in the UAE.

The SKU file that keeps this clean

Everything above reduces to one artefact: an accurate, evidenced SKU map. Here is what it needs to hold.

Field	Why it is there
Total sugar and other sweeteners per 100ml	Sets the tier under Article 10(1)
Whether naturally occurring sugar is present alongside added sugar	Article 10(3) requires it to be counted in
Whether the drink is sweetened only with artificial sweeteners	Puts it at AED 0 per litre under item 8
Reference to the accepted laboratory report	Without it, Article 13(4) imposes the highest band
Whether the product is an energy drink	Keeps it on the separate 100% track
Whether any Article 7(5) exclusion applies	Milk content, baby food, dietary or medical use, restaurant preparation
Ready-to-drink volume for concentrates, per producer guidelines	Article 10(2) measurement basis
Litres sold in the period	The multiplier for the per-litre rate
Excise price inputs, for energy drinks only	The Article 11 higher-of comparison
Date the sugar figure was last confirmed	Reformulation moves products between tiers

Field list is Velmont Crest’s own working practice; every field maps to a provision of Cabinet Decision No. 197 of 2025.

Where this leaves a UAE beverage business

The excise tax on carbonated drinks is not complicated once the chain is laid out, but every link matters. From 1 January 2026, carbonated drinks are no longer a category at all — they are assessed as sweetened drinks by sugar content per 100ml, at AED 1.09 per litre from 8g, AED 0.79 per litre from 5g to under 8g, and nothing below 5g or for artificially sweetened lines. Energy drinks stay at 100% of the excise price.

The concentrates, powders, gels and extracts that make these drinks are inside the net, assessed on the ready-to-drink form. Importers, producers, stockpilers and warehouse keepers must register regardless of turnover and file monthly by the 15th. And the 5% VAT lands on top of the excise-inclusive value, not beside it.

Get the sugar tier right on day one, hold an accepted laboratory report for every sweetened SKU, watch your stockpiler exposure before you buy, and keep the monthly cycle disciplined. Do that and excise becomes a predictable line in your compliance calendar rather than a recurring scramble.

Velmont Crest is a DED-licensed UAE accounting firm providing advisory, preparation and compliance support for the full indirect-tax stack — excise tax classification and filing support, VAT, and the accounting and bookkeeping that keeps the records behind them clean. Read more on our insights hub or get in touch via our contact page.

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Disclaimer: Velmont Crest is a DED-licensed accounting firm providing advisory, preparation and compliance support services. We are not a law firm, the Federal Tax Authority, or an FTA-registered tax agent representing clients before the FTA. Excise categories, rates, standard prices and filing rules are set and updated by the UAE Cabinet and the FTA — verify the current classification, the applicable excise price and your registration obligations against the legislation and live FTA guidance before acting, and consult a qualified professional for advice specific to your circumstances.

References

• Cabinet Decision No. 197 of 2025 on Excise Goods, Excise Tax Rates and the Methods of Calculating the Excise Price
• UAE Ministry of Finance — announcement of the tiered volumetric model for sweetened beverages
• Cabinet Decision No. 37 of 2017 and its amendments — Executive Regulation of the Excise Tax Decree-Law
• Federal Decree-Law No. 7 of 2017 on Excise Tax and its amendments
• FTA — calculating excise tax under the tiered volumetric model — note that this page showed superseded figures when read on 4 August 2026