15 September 2025 - The United Arab Emirates (UAE) Federal Tax Authority (‘FTA’) has released an Excise Tax (ET) Public Clarification on the transition to a tiered-volumetric model of ET for sweetened drinks (‘EXTP012’). 

The FTA has released this clarification to clarify the key aspects of the upcoming amendments to the UAE Excise Tax legislation. This clarification aims to give businesses time to assess the changes and make the necessary adjustments in their ET landscape, as the amendments involve a move away from the current application of ET on sweetened drinks based on their retail selling price and introduce a tiered-volumetric model for calculating ET on sweetened beverages. EXTP012 mentions these changes may come into effect as early as 1 January 2026. The exact date of implementation is still to be confirmed.

In order to be well prepared, it’s crucial that impacted businesses take steps now to assess their product portfolio and analyze the impact of these changes. Swift action will need to be taken to secure lab tests for all products, followed by making updates to the Brandsync portal prior to the effective date of the change to ensure the correct ET rate is applied. Additionally, consideration should be given to commercial pricing decisions of products resulting from the rate changes.

Key Updates and Changes

The newly introduced method of calculating ET for sweetened drinks
will be based on a tiered-volumetric model, where the tax rate varies
depending on the concentration of sugar (measured in grams per 100 milliliters
(ml)) in each beverage. This model distinguishes between products with low,
medium, and high sugar content, as well as artificial sweeteners only, thereby
replacing the current fixed rate of 50% that applies uniformly to all sweetened
beverages, regardless of their actual sugar or sweetener content.

Under the new approach, sweetened drinks will fall into one of the following four tax tiers:

• High sugar category (≥8 gram of total sugar and other sweeteners per 100ml);
• Moderate sugar category (≥5 and <8gram of total sugar and other sweeteners per 100ml);
• Low sugar category (<5 gram of total sugar and other sweeteners per 100ml); or
• Category of sweetened drinks that contain only artificial sweeteners (e.g., aspartame, sucralose, saccharin, and stevia). Sweetened drinks falling under this category should be subject to a zero-rate of ET.

The ET rates for each of the high, moderate, and low sugar categories will be specified in an upcoming Cabinet decision. 

For completeness, the drinks that only contain natural sugar will not be considered a sweetened drink for the purposes ET. As such, only drinks which contain added sugar, or a combination of added and natural sugar should be subject to ET.

The FTA has announced that the new model should be effective as soon as 1 January 2026, although final confirmation of the effective date is still awaited. The Public Clarification has been released now to allow affected businesses to start their preparations for the changes, including aligning their operations, pricing structures, and compliance systems with the new framework.

The new model will apply exclusively to sweetened drinks. Other categories of excise goods such as energy drinks will remain subject to the existing ET regime. Additionally, carbonated drinks will no longer be classified as a separate excise goods category. Instead, they will be classed as sweetened drinks and ET will apply to these products based on their sugar content.

Additionally, the categories of goods excluded from the definition of a sweetened drink will be expanded to include the following additional categories:

• Beverages and concentrates with added sugars or sweeteners, made for personal or non-commercial consumption by individuals; and
• Beverages with added sugars or sweeteners, prepared in restaurants and served in unsealed open containers for direct consumer consumption.

The clarification does not highlight which existing ET products will fall in the expanded exclusion categories.

From a compliance perspective, Taxable Persons will need to either register new beverages or update existing products’ registrations on the FTA's portal (i.e., Brandsync portal) to ensure they reflect the correct category of excise good. This process will require the submission of supporting documentation, including laboratory reports detailing content of each type of sugar. If a lab report is not obtained, a sweetened drink will be classified under the High Sugar category (until a lab report is provided). The Ministry of Industry and Advanced Technology will publish a list of accredited labs for this purpose.Transitional rules for sweetened drinks will be introduced to address scenarios such as stockpiling, where individuals may expect a change in ET liability due to new regulations, including attempts to gain a tax advantage.

The FTA advises businesses to proactively prepare for these changes by updating their internal systems, collaborating with accredited laboratories to secure sugar content certifications, and ensuring that all product labelling and documentation meet FTA standards. Additional technical guidance regarding requirements related to sugar content testing will be issued by the FTA in due course.

For this release of the Public Clarification EXTP012, businesses can access the guide here.

How businesses can get ready

The changes to the ET rates for sweetened drinks will require taxpayers to undertake a full review of their sweetened drink product portfolio in order to determine the impact of the changes. In particular, the following scenarios may arise:

• Products which were previously subject to ET may now be taxed at a lower rate, potentially allowing them to be offered at a lower price in the market.
• Products which were previously subject to ET may now be taxed at a higher rate, which will again require closer review of product market pricing.
• Products may now become either zero-rated or excluded from the scope of ET, which could again achieve savings or opportunities for more competitive market pricing.

It is also critical that sufficient time is allowed to arrange for lab reports to evidence sugar content in products in order to ensure product registrations on the Brandsync portal can be updated on a timely basis prior to the effective date of the change. 

At Deloitte, we have a team of Excise Tax experts ready to support you in analyzing the impact of the changes, review product classification and support with the implementation of the required changes. Please reach out to your usual Deloitte contact, or the people mentioned below to discuss further.

Notice

This alert has been written in general terms and does not constitute any form of advice or recommendation by Deloitte and, therefore, cannot be relied on to cover specific situations; application of the principles set out will depend upon the particular circumstances involved and we highly recommend that you obtain professional advice before acting or refraining from acting on any of the contents of this publication. Deloitte accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action due to any material in this publication.

Deloitte Middle East would be happy to help readers understand how to apply the principles set out in this publication to their specific circumstances.