The recent announcement by the Ministry of Finance introduces significant changes through Cabinet Decision No. 197 of 2025 concerning the excise tax on sweetened beverages. This decision outlines amendments aimed at implementing the “النموذج الحجمي المتدرج” on these drinks, ultimately replacing Cabinet Decision No. 52 of 2019. These reforms are instrumental in the government’s ongoing efforts to promote public health and encourage healthier consumption patterns within the community, aligning with the latest updates to Federal Decree-Law No. 7 of 2025 regarding excise tax.
Clarification of Excise Tax Framework
The recent adjustments aim to delineate the products subject to excise tax, along with the applicable rates and values, within a unified legislative tool. This effort intends to enhance understanding and compliance among all taxpayers affected by the regulation. The incorporation of “النموذج الحجمي المتدرج” on sweetened beverages means that tax will now be calculated based on the amount of sugar and sweeteners present in each 100 ml of the drink.
Tax Rates for Sweetened Beverages
Under the new framework, a tax of 0.79 AED per liter will be imposed on sweetened beverages that contain between 5 grams and 8 grams of sugar and other sweeteners per 100 ml. Conversely, those with 8 grams or more will be subject to a higher rate of 1.09 AED per liter. Notably, beverages containing less than 5 grams of sugar or only artificial sweeteners will benefit from a zero tax rate.
Reporting and Compliance Measures
The reforms also include stipulated procedures for cases where taxpayers fail to submit the required lab reports or documentation to the authority regarding the registration of sweetened beverages. In such instances, these drinks will incur tax based on the highest classification of sugar content. However, if a certified lab report is later provided that confirms lower sugar levels, adjustments to the registration will be made accordingly.
Implementation Timeline and Government Commitment
The changes related to the implementation of “النموذج الحجمي المتدرج” will take effect for all taxpayers starting January 1, 2026. The Ministry of Finance has emphasized that these adjustments are part of the government’s commitment to fostering public health and creating a clear, uniform framework for the excise tax that benefits consumers and investors alike.