The tax will take effect on January 1, 2020, and will include any SSB (sugar sweetened beverage) product containing sugar or sweeteners, and is produced as either a ready-to-drink beverage or as concentrates, gels, powders, extracts, or any other form that can be converted into a SSB.
This is an extension to the list of excise taxable products after the first in 2017, with 50% tax on carbonated drinks, and 100% tax on energy drinks.
However, certain beverages will be excluded from the tax even if they are categorised as SSB, examples are beverages containing more than 75% milk or milk substitutes, baby formula, baby food, beverages for special dietary needs and medical use.
Officials say sugar is defined as type of sugar determined under Standard 148 of the GCC Standardisation Organisation and any subsequent relevant standards. Examples of sugar included fructose, sucrose, glucose syrup and lactose etc.
Sweeteners include those listed under Standard 995 of the GCC Standardisation Organisation and any subsequent relevant standards. Some examples of sweeteners are aspartame, sucralose, and saccharin etc.
According to a statement released by the Cabinet General Secretariat, "The decision comes to support the UAE government's efforts to enhance public health and prevent chronic diseases directly linked to sugar consumption."
The statement also mentioned that manufacturers of these sugary products must clearly identify the sugar content to make it easier for the consumers to make sensible healthy choices.
Excise goods
Excise tax is a form of indirect tax levied on specific goods which are typically harmful to human health or the environment.
These goods are referred to as “excise goods” and consumers will need to pay more for them.
The UAE Government is levying excise tax to reduce consumption of unhealthy commodities while also raising revenues that can be spent on beneficial public services.
According to the UAE government, the tax on sugar-containing beverages applies to businesses importing excise goods into the UAE, locally produced excise goods, and stockpiling of excise goods in the UAE.
Tax impact
Anurag Chaturvedi, managing partner at Chartered House Tax Consultancy, told Khaleej Times: "We have already seen the impact on energy drinks, where a fall of 65% in sales was reported after the introduction of the excise tax.
“Definitely, I see a reduction in the sale of these products as the prices shall go up. With VAT already being levied on these products and with the addition of excise tax, prices will go up and consumers automatically shall reduce the consumption of these products."
Related campaign
In another bid to fight sugar and sugar-containing products, the UAE’S Ministry of Health and Prevention (MoHAP) launched a campaign in September to raise awareness about the health risks associated with the overconsumption of sugar-sweetened beverages or any other sweeteners.
The “Beat the Habit Fight Extra Sugar” campaign will run through November, and encourage citizens to adopt healthy lifestyles, eat healthy food, engage in physical activity, quit smoking and build a healthy society.
Dr. Fadila Mohamed Sherif, director of MoHAP’s health education & promotion department, said: "The campaign aims at curbing the overconsumption of sugar-sweetened beverages, and promote the awareness of healthy lifestyles by providing the community with the information and skills needed to adopt healthy lifestyles.”