Beginning January 1, 2026, the United Arab Emirates will implement a new taxation system for soft drinks, linking beverage taxes directly to their sugar content. The move replaces the current flat 50% excise duty with a tiered structure designed to encourage healthier consumption habits among residents and visitors alike.

From Flat Tax to Sugar-Based Structure

Under the upcoming framework, the amount of tax applied to each drink will depend on the grams of sugar per 100 milliliters. This means that beverages with higher sugar levels will face steeper taxes, while those containing little or no sugar could become more affordable. The government’s decision reflects a growing global trend toward using fiscal measures to influence dietary behavior and reduce health risks associated with excessive sugar intake.

Encouraging Healthier Beverage Choices

The revised system aims to motivate both consumers and manufacturers to make healthier decisions. By making sugary drinks more expensive, authorities hope to nudge consumers toward low-sugar or zero-sugar alternatives. Beverage companies may also be encouraged to reformulate their products with reduced sugar content in order to remain competitive under the new pricing model.

Impact on Businesses and Registration Requirements

Businesses operating in the beverage sector will need to prepare for significant administrative adjustments before the policy takes effect. Companies must ensure that their product labeling accurately reflects sugar levels per 100 milliliters, as this information will determine the applicable tax rate. Additionally, firms may be required to update their registration details with relevant authorities to comply with the revised excise framework.

Potential Price Adjustments for Consumers

For consumers, this change could result in noticeable price differences across beverage categories. Drinks containing high amounts of added sugars are expected to become costlier, while low-calorie or unsweetened options may see lower prices compared with current rates. The overall goal is not only to influence purchasing decisions but also to create a more transparent link between product composition and retail cost.

A Step Toward Public Health Awareness

The introduction of a tiered tax system underscores the UAE’s broader commitment to public health initiatives that address lifestyle-related conditions such as obesity and diabetes. Similar approaches have been adopted in several countries worldwide, where evidence suggests that targeted taxation can help reduce consumption of sugary beverages over time. By aligning fiscal policy with health objectives, the UAE aims to foster long-term behavioral change within its population.

As January 2026 approaches, both consumers and businesses are advised to stay informed about implementation details and compliance requirements. The transition from a flat-rate excise duty to a sugar-based model marks a significant shift in how beverages are priced and perceived across the country—one that could reshape market dynamics while promoting healthier daily choices for millions of people living in or visiting the UAE.