For years, many shoppers in the United Arab Emirates never realised that part of their grocery bill was shaped by a quiet policy working behind the scenes. It wasn’t labelled on receipts, rarely discussed at checkout, and easy to overlook. Yet it influenced the price of some of the most common items in the fridge.
That hidden cost is the sugar tax, and it has now entered a new phase. From January 1, 2026, the way sweetened drinks are taxed has fundamentally changed. Instead of a one-size-fits-all charge, prices are now linked directly to how much sugar is actually in the drink. The result is subtle but powerful: healthier options are becoming cheaper, while sugar-heavy choices are finally being priced for what they contain.
If your weekly shop feels slightly different, it’s not your imagination.
A Quiet Change That Shows Up at Checkout
Most shoppers don’t study excise policies before buying a drink. They notice the total, tap their card, and move on. That’s why this shift matters. The new system doesn’t announce itself loudly, but it influences everyday decisions in small, repeated ways.
Under the updated rules, drinks are no longer taxed just because they are sweetened. They are taxed based on how much sugar they contain per 100 millilitres. This means two products sitting side by side can now carry very different tax burdens, even if they look similar on the shelf.
Over time, those small differences add up, both for household budgets and for public health.
From Flat Fees to Sugar-Based Taxation
When the UAE first introduced excise duty on sweetened drinks in 2017, the structure was simple. Any sweetened beverage was hit with a flat 50 percent tax, regardless of whether it contained five grams of sugar or fifteen. Energy drinks were taxed even more heavily, at 100 percent.
While the policy helped curb consumption overall, it didn’t distinguish between mildly sweet drinks and sugar-loaded ones. Manufacturers had little incentive to reduce sugar if the tax stayed the same.
That changed on January 1, 2026. The new system calculates excise duty per litre, based on sugar concentration. This encourages brands to reformulate and gives consumers a financial nudge toward lower-sugar options.
Understanding the New Sugar Bands
The updated structure is built around clear sugar thresholds, making the rules easier to understand once you know what to look for.
Drinks containing 8 grams or more of sugar per 100 millilitres are taxed at Dhs1.09 per litre. Those with 5 to 7.99 grams of sugar per 100 millilitres are taxed at Dhs0.79 per litre. Drinks with less than 5 grams of sugar per 100 millilitres are exempt from excise duty altogether.
Artificially sweetened drinks also fall into the zero-tax category, while energy drinks remain subject to a 100 percent excise tax, reflecting their separate health considerations.
This tiered approach rewards lower sugar content instead of treating all sweetened drinks the same.
What’s Getting Cheaper and What Isn’t
One of the most surprising outcomes of the new system is that some popular drinks are actually becoming cheaper.
A 330ml full-sugar cola, for example, now carries an excise duty of around 36 fils, down from about 83 fils under the previous flat tax. A one-litre premium fruit nectar has seen its excise drop dramatically, from roughly Dhs6 to Dhs1.09, depending on sugar concentration.
Diet sodas and zero-sugar alternatives are now excise-free, making them clearly cheaper than their full-sugar counterparts. Over time, this price gap becomes harder to ignore.
Shoppers should expect to see these changes appear gradually as older stock clears and newly taxed products reach shelves.
Why the Change Matters Beyond Price
At first glance, this may seem like a technical tax update. In reality, it’s a behavioural tool.
By tying cost directly to sugar content, the policy makes nutrition part of the purchasing decision without forcing it. Consumers are not banned from buying sugary drinks. They are simply asked to pay a little more for them.
This approach respects choice while subtly guiding habits. For families managing budgets, the incentive to choose lower-sugar drinks is immediate and practical. For manufacturers, the pressure to reduce sugar is now financial as well as reputational.
The Long-Term Impact on Brands and Recipes
One of the least visible but most important effects of the new sugar tax is happening before products even reach shelves.
Brands now have a clear reason to reformulate. Reducing sugar by even a small amount can move a drink into a lower tax band or remove excise duty entirely. That can mean the difference between competing on price or losing shelf space.
Over time, shoppers may notice familiar drinks tasting slightly less sweet. These changes are not always advertised, but they reflect a broader shift toward healthier formulations driven by the new tax structure.
How Your Shopping Habits May Change
Most people don’t overhaul their diets overnight. Change happens through repetition. A cheaper price here, a slightly higher cost there.
When diet and low-sugar drinks consistently cost less, they become the default choice. When sugary drinks become an occasional indulgence rather than a routine purchase, consumption naturally declines.
The reform isn’t about numbers on a label. It’s about what ends up in your trolley, week after week.
A Hidden Tax Turned Visible Choice
For years, the sugar tax was something consumers paid without thinking about it. Now, it’s become a visible signal embedded in pricing.
This shift marks a new phase in how policy and daily life intersect. Instead of punishing categories, the system rewards better options. Instead of hiding the cost, it reflects it.
The next time your receipt looks slightly different, remember that it’s not just inflation or coincidence. It’s a deliberate move to make healthier choices easier, cheaper, and more natural.
And that’s a hidden tax finally working in plain sight.
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