New Rules for Calculating Sugar Content in Concentrated Products

Published: December 26, 2025 | Effective Date: January 1, 2026

The Federal Tax Authority (FTA) has issued Decision No. 10 of 2025, introducing a standardized mechanism for calculating the percentage of sugar and other sweeteners in concentrated beverage products. This decision addresses a critical gap in excise tax compliance for businesses dealing with concentrates, powders, gels, and extracts used to produce sweetened drinks.

What Does This Decision Address?

FTA Decision No. 10 of 2025 establishes clear guidelines for situations where product manufacturers cannot accurately determine sugar content in concentrated products, either because:

• No manufacturer guidelines are available for dilution ratios
• Existing guidelines have been proven inaccurate

This decision ensures uniform tax treatment across the industry and provides businesses with a transparent framework for compliance.

Key Definitions You Need to Know

Sweetened Drink: Any product with added sugar, artificial sweeteners, or other sweeteners intended for consumption as a beverage, whether ready-to-drink or requiring preparation.

Concentrated Products: Concentrates, powders, gels, and extracts that can be converted into sweetened drinks.

Dilution Ratio: The volume (in milliliters) of the final ready-to-drink product resulting from each 1 milliliter or 1 gram of concentrated product after dilution.

Low-Sugar Category: Sweetened drinks containing less than 5 grams of total sugar and other sweeteners per 100 milliliters.

Artificially Sweetened Category: Sweetened drinks to which only artificial sweeteners are added.

The New Calculation Mechanism

When guidelines are unavailable or proven inaccurate, businesses must follow this three-step process:

Step 1: Obtain Laboratory Analysis

Taxable persons must obtain a Laboratory Report from an accredited laboratory (as per the Ministry of Industry and Advanced Technology's published list) showing the total amount of sugar and other sweeteners in the concentrated product unit.

Step 2: Calculate Final Drink Volume

The volume of the final sweetened drink is calculated using this formula:

Volume of final drink = (Total sugar and sweeteners content in grams) × 20

Step 3: Determine Dilution Ratio

The FTA will determine the dilution ratio using this formula:

Dilution Ratio = (Volume of final drink) ÷ (Volume in ml or weight in grams of concentrated product unit)

Important Exclusions

The decision specifies two scenarios where the above calculation mechanism does not apply:

1. Liquid Concentrates with Low Sugar Content: If the laboratory report shows less than 5 grams of total sugar and sweeteners per 100 milliliters, the product is classified under the Low-Sugar Category.
2. Artificial Sweeteners Only: If the laboratory report confirms the product contains only artificial sweeteners, it is classified under the Artificially Sweetened Category.

What This Means for Your Business

For Manufacturers and Importers:

• Ensure you work with accredited laboratories for sugar content analysis
• Maintain accurate laboratory reports for all concentrated products
• Review your product classifications to ensure compliance
• Update internal processes to align with the new calculation methodology

For Retailers and Distributors:

• Verify that your suppliers have proper documentation for concentrated products
• Ensure accurate excise tax calculations in your pricing
• Update your inventory management systems to reflect proper categorization

For Tax Compliance:

• Submit laboratory reports to the FTA as required
• Implement the standardized calculation method for products without accurate guidelines
• Ensure all documentation is ready before the January 1, 2026 effective date

Timeline and Implementation

Decision Issued: December 12, 2025
Effective Date: January 1, 2026
Publication: Official Gazette

Businesses have until January 1, 2026, to ensure full compliance with these new requirements.

Why This Decision Matters

This decision brings much-needed clarity to the excise tax treatment of sweetened beverage concentrates. By establishing a standardized calculation method, the FTA ensures:

• Consistent tax treatment across all concentrated products
• Reduced ambiguity in product classification
• Fair competition within the industry
• Simplified compliance procedures for businesses

The decision reflects the FTA's commitment to creating a transparent and efficient tax system that supports business compliance while protecting public health objectives through appropriate excise taxation on sweetened beverages.

How Essence UAE Can Help

At Essence Accounting and Tax Consultancy LLC, our FTA-accredited team stays ahead of all regulatory changes to ensure your business remains compliant. With over a decade of experience in UAE tax matters (TAN: 30006266), we can assist you with:

• Reviewing your product portfolio for compliance with FTA Decision No. 10 of 2025
• Coordinating with accredited laboratories for required testing
• Calculating appropriate dilution ratios and excise tax obligations
• Preparing and submitting necessary documentation to the FTA
• Developing internal processes to ensure ongoing compliance

Take Action Now

Don't wait until the last minute. With the January 1, 2026 effective date approaching, now is the time to ensure your business is fully prepared for these new requirements.

Contact Essence UAE today for expert guidance on FTA Decision No. 10 of 2025:

📞 Phone: +971 56 583 4586
📧 Email: info@essenceuae.com
📍 Location: Office no. 15, 21 (07), Iris Bay Tower, Business Bay, Dubai, UAE