The UAE Ministry of Finance has issued a new Cabinet Resolution introducing significant updates to the Executive Regulations of the Excise Tax Law, marking a shift toward a more precise, health-driven, and modern tax framework.
Sugar Levels Now Determine Excise Tax Rates
One of the most important changes is the move away from a flat excise tax rate. Under the revised rules, excise tax on sweetened beverages will now follow a tiered structure linked directly to sugar content. Products with higher sugar levels will be subject to higher excise tax, while lower-sugar alternatives will benefit from reduced rates.
This change is designed to promote healthier consumer choices while ensuring a fairer and more targeted tax system.
Stronger Reporting and Testing Standards
The updated regulations also introduce stricter reporting requirements for businesses and clearer laboratory testing standards to verify product ingredients. These measures aim to enhance accuracy, minimize disputes, and strengthen enforcement of excise tax obligations.
In line with the UAE’s public health priorities, certain health related products, such as items used to support smoking cessation, are exempt from excise tax under the revised framework.
Alignment with Updated Excise Tax Law
According to the Ministry of Finance, Cabinet Resolution No. 198 of 2025 amends provisions of Cabinet Resolution No. 37 of 2017, which governs the Executive Regulations of the Excise Tax Law. These amendments follow legislative updates introduced under Federal Decree-Law No. 7 of 2025, ensuring consistency between the law and its implementing regulations.
Supporting Compliance and Business Stability
The Ministry stated that the revised rules are intended to simplify compliance for businesses, improve clarity around tax obligations, and foster a stable and predictable business environment. The amendments also aim to strengthen tax compliance, safeguard public revenues, and support the development of a more efficient and flexible excise tax system.
Key areas impacted by the changes include:
- Excise tax registration
- Tax deductions
- Refund procedures
- Administrative and compliance processes
Officials emphasized that these updates are part of a broader initiative to align the UAE’s tax framework with international best practices, enhancing transparency, efficiency, and long-term sustainability across the excise tax regime.
