The UAE has no personal income tax, but it levies a special tax on a few groups of goods to reduce the consumption of harmful goods: the excise tax. It matters to importers, producers and stockpilers of these goods and affects the price consumers pay. This article is based on Cabinet Decision No. 197 of 2025, whose English translation is published on the website of the UAE Ministry of Finance, the "Mechanism for registering excise goods and calculating excise tax" page and the Federal Tax Authority's announcement of 29 October 2025; these sources were checked on 25 October 2026.
Legal basis
The basis of this tax is Federal Decree-Law No. 7 of 2017 on Excise Tax. The goods and rates are set by the Cabinet:
| Subject | What Decision No. 197 of 2025 says |
|---|---|
| Date issued | 27 November 2025 |
| Effective date | 1 January 2026 |
| Decision repealed | Cabinet Decision No. 52 of 2019 |
| Link with the Gulf states | The decision refers to the Common Excise Tax Agreement of the Gulf Cooperation Council states |
Goods and rates
| Goods | Rate or amount |
|---|---|
| Tobacco and tobacco products | 100% |
| Liquids used in electronic smoking devices | 100% |
| Electronic smoking devices and tools | 100% |
| Energy drinks | 100% |
| Sweetened drinks with 8 grams or more of sugar or other sweeteners per 100 ml | AED 1.09 per litre |
| Sweetened drinks with 5 grams to less than 8 grams | AED 0.79 per litre |
| Sweetened drinks with less than 5 grams | AED 0 |
| Drinks with only artificial sweeteners, or artificial sweeteners and less than 5 grams of sugar | AED 0 |
The decision explains that tobacco covers all items in Chapter 24 of the GCC Common Customs Tariff, including electrically heated cigarettes, but products made exclusively to help people stop smoking are not included. Electronic smoking devices and their liquids are covered whether or not they contain nicotine.
What is a sweetened drink?
The decision defines a sweetened drink as a product to which sugar, an artificial sweetener or another sweetener has been added, whether ready to drink, concentrate, powder, gel or extract. If a drink also contains natural sugar, the natural sugar counts in the sugar content. For concentrates and powders, the sugar content is calculated on the final form of the drink, according to the producer's instructions. These are excluded from the definition:
- a drink that is at least 75% milk;
- a drink that is at least 75% milk substitutes;
- baby formula and baby food;
- drinks for special dietary and medical uses, under the Gulf standards;
- a drink prepared in a restaurant or similar place and served in an open, unsealed container for direct consumption.
Alcoholic drinks are also outside the definitions of energy drinks and sweetened drinks. According to the Federal Tax Authority, carbonated drinks are no longer a separate group and their status is set by their sugar content.
The excise price and the method of calculation
For the 100% goods, the tax is calculated on the "excise price". The decision says the excise price is the higher of two: the price the Federal Tax Authority publishes in a standard price list, or the "designated retail sales price" less the tax included in it. For goods taxed at 100%, the tax included in the retail price equals half of the designated retail sales price. The designated retail sales price is in turn the higher of two: the recommended retail price that the importer or producer declares on the goods, or the average retail price in the market; both after deducting value added tax.
Laboratory report and registration of goods
The decision obliges whoever registers a sweetened drink to provide a laboratory report accepted by the Federal Tax Authority on its sugar and sweetener content. Without this report, the tax is calculated at the highest sugar category until a report proves another category. In its announcement of 29 October 2025, the Federal Tax Authority asked producers, importers and stockpilers to obtain the "UAE Certificate of Conformity regarding the sugar and sweetener content in beverages". The same authority says its services are available only through UAE Pass.
Four examples
These examples are hypothetical and only apply the official rates and rules above.
| Goods | Calculation | Tax |
|---|---|---|
| A 330 ml can with 10 grams of sugar per 100 ml | 0.33 litre × AED 1.09 | about AED 0.36 |
| A 500 ml bottle with 6 grams of sugar per 100 ml | 0.5 litre × AED 0.79 | about AED 0.40 |
| A 1.5 litre bottle with only artificial sweeteners | 1.5 litre × 0 | 0 |
| An energy drink with a designated retail price of AED 10 | Half of AED 10 is tax; excise price AED 5 × 100% | AED 5 |
The decision says that if the calculation results in fractions of a fils, the tax on each good is rounded to four decimal places of the dirham at registration, and the tax in periodic returns to the nearest fils. In the energy drink example, if the Federal Tax Authority's list price is higher than AED 5, that price becomes the excise price.
Practical points
- If you import or produce sweetened drinks, prepare the laboratory report and the certificate of conformity before registering the goods; without them, the highest sugar category applies.
- For low-sugar drinks, bringing sugar below 5 grams per 100 ml takes the tax to zero; weigh this in the product formula.
- For the 100% goods, the recommended retail price on the goods affects the excise price.
- Value added tax is separate; the article "UAE VAT" explains it.
- If you are registering a company in the UAE, also see the article "UAE corporate tax".
Royal Golden does not give tax, legal or financial advice. This article is general information, and the decision on any goods and any return rests with the UAE Federal Tax Authority.
Sources
- UAE Ministry of Finance, Cabinet Decision No. 197 of 2025 on Excise Goods, Excise Tax Rates and the Methods of Calculating the Excise Price, unofficial English translation — https://mof.gov.ae/wp-content/uploads/2025/12/Cabinet-Decision-No.197-of-2025-on-Excise-Goods-Excise-Tax-Rates-and-the-Methods-of-Calculating-the-Excise-en-11.12.25.pdf (checked on 25 October 2026)
- UAE Federal Tax Authority, Mechanism for registering excise goods and calculating excise tax — https://tax.gov.ae/en/taxes/excise.tax/excise.tax.topics/mechanism.for.registering.excise.aspx (checked on 25 October 2026)
- UAE Federal Tax Authority, announcement of 29 October 2025 on the tiered model for sweetened drinks — https://tax.gov.ae/en/media.centre/news/federal.tax.authority.clarifies.new.aspx (checked on 25 October 2026)