With the increasing regulation of sweetened drinks under the UAE Excise Tax regime, the Federal Tax Authority (FTA) has issued Decision No. 10 of 2025, introducing a standardised mechanism for calculating the percentage of sugar and other sweeteners in certain concentrated products.
This Decision becomes particularly relevant where existing guidelines are unavailable or have been proven inaccurate, ensuring consistency, transparency, and correct excise tax classification. The Decision is effective from 1 January 2026.
Scope and Applicability of the Decision
This Decision applies to concentrates, powders, gels, and extracts that can be converted into sweetened drinks (Concentrated Products), specifically in cases where:
- No guidelines exist regarding the amount of sugar or other sweeteners in Concentrated Products; or
- Existing guidelines are proven inaccurate.
The intent is to prevent misclassification of excise goods and ensure correct tax treatment based on actual sugar and sweetener content.
Mechanism for Calculating Percentage of Sugar and Other Sweeteners
Step 1: Obtaining a Laboratory Report
The taxable person must obtain a laboratory report from an accredited laboratory. The report should clearly specify the total quantity of sugar and other sweeteners contained in one unit of the concentrated product.
This laboratory report must be submitted to the Federal Tax Authority (FTA) as part of the compliance process.
Step 2: Calculating the Final Drink Volume
The final volume of the sweetened drink is calculated using the following standard formula:
Final Drink Volume = Total sugar and other sweeteners (in grams) × 20
This calculation standardises the conversion of sugar content into the expected final drink volume, ensuring consistency in excise tax assessment.
Step 3: Determining the Dilution Ratio
Once the final drink volume is determined, the dilution ratio is calculated as prescribed by the FTA:
Dilution Ratio = Final drink volume ÷ Volume (ml) or weight (g) of the concentrated product unit
The dilution ratio enables the Authority to assess the quantity of sweetened drink produced from the concentrate and ensures accurate excise tax classification.
Exclusions from the Mechanism
The Decision clearly excludes certain cases from this calculation mechanism:
- Low-Sugar Liquid Concentrates
If a liquid concentrated product contains less than 5 grams of sugar and other sweeteners per 100 ml, it is automatically classified under the Low-Sugar Category. - Artificially Sweetened Products
If the laboratory report confirms that the product contains only artificial sweeteners, it will be classified under the Artificially Sweetened Category, and the calculation mechanism will not apply.
Conclusion
Federal Tax Authority Decision No. 10 of 2025 provides much-needed clarity in situations where sugar and sweetener guidelines are missing or unreliable. By introducing a clear, formula-based mechanism, the FTA has strengthened consistency, transparency, and fairness in excise tax administration.
Businesses dealing in sweetened drinks and their concentrates should proactively review their product classifications, laboratory testing procedures, and compliance systems well before 1 January 2026 to avoid regulatory risks.
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