What's happened
Starting in 2026, the UAE will shift from a flat 50% excise tax on sugary drinks to a volume-based system linked to sugar content. This aims to promote healthier choices, reduce prices for low-sugar beverages, and encourage reformulation by manufacturers. The change reflects broader health and economic strategies.
What's behind the headline?
The shift to a volumetric sugar tax in the UAE will likely accelerate reformulation among beverage companies, as they seek to lower sugar content to reduce tax burdens and costs. This approach will make healthier options more affordable, encouraging consumers to choose lower-sugar drinks. Industry leaders like PepsiCo are already adjusting their portfolios, aiming for a significant share of sales from low-calorie beverages. This policy change underscores a broader trend toward health-conscious regulation, which could influence other countries to adopt similar models. However, the transition may pose challenges for producers of high-sugar products, potentially impacting their market share and profitability. The move also signals a strategic alignment with global health goals, potentially reducing the long-term burden of diet-related illnesses. Overall, the policy will likely foster a shift in consumer behavior and industry practices, promoting healthier lifestyles while supporting economic adaptation.
What the papers say
The articles from Gulf News provide detailed insights into the UAE's policy shift, emphasizing the practical implications for consumers and manufacturers. They highlight how the new volumetric model will incentivize reformulation and healthier choices, with companies like PepsiCo already preparing for the change. The coverage also contextualizes the move within broader health and economic trends, noting that over 117 countries now have sugar taxes. The articles from Gulf News contrast with broader international coverage of India’s GST reforms, which focus on simplifying tax slabs and increasing taxes on luxury and sin goods. While India’s reforms aim to boost domestic consumption and counter US tariffs, the UAE’s focus is on health and industry reform. Both stories reflect governments’ strategic use of taxation to influence economic and social outcomes, but the UAE’s approach is more targeted at public health, whereas India’s reforms are broader economic measures.
How we got here
The UAE introduced a 50% excise tax on sugary drinks in 2020. The government announced in early 2025 that from 2026, this would shift to a volumetric tax based on sugar content, aiming to incentivize healthier formulations and reduce costs for consumers of lower-sugar beverages. The move aligns with global trends and local health initiatives.
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How Will the UAE's New Sugar Tax Model Impact Public Health?
The UAE is shifting from a flat sugar tax to a volume-based system starting in 2026. This change aims to promote healthier beverage choices, encourage manufacturers to reformulate products, and potentially lower prices for low-sugar drinks. But what does this mean for consumers, producers, and public health? Below, we explore the key questions about this significant policy update and its broader implications.
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Why is the UAE changing its sugar tax system?
The UAE is shifting from a flat sugar tax to a volume-based system starting in 2026. This change aims to promote healthier eating habits, encourage manufacturers to reformulate products, and reduce prices for low-sugar drinks. But what does this mean for consumers and the wider economy? Below, we explore the reasons behind this move and what it could mean for other countries considering similar health-related taxes.
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