Today's Edition
MAYS IBRAHIM (ABU DHABI)
The new year brings a series of policy reforms in the UAE aimed at promoting healthier lifestyles, environmental sustainability and streamlined tax compliance.
As of January 2026, sweetened drinks will carry a new price tag, single-use plastics will be harder to find, and businesses will navigate updated tax rules.
For consumers and companies alike, the new rules signal a shift towards more responsible choices and a more sustainable future.
This includes a new tiered sugar tax on sweetened beverages, introduced under Cabinet Decision No. (197) of 2025.
Under the new framework, drinks containing 5 to 7.9 grammes of sugar per 100 millilitres will face a tax of Dh0.79 per litre, while beverages with 8 grammes or more will be taxed at Dh1.09 per litre.
Drinks with less than 5 grammes of sugar per 100 millilitres or those containing only artificial sweeteners are exempt.
This marks a shift from the flat 50% excise tax introduced in 2019 and aims to encourage healthier consumption habits across the country.
Sustainability
The Ministry of Climate Change and Environment (MOCCAE) will also roll out the second phase of the UAE’s single-use plastic ban under Ministerial Decision No. 380 of 2022.
From January, prohibited items will include Styrofoam food containers, cutlery, straws, stirrers, plates, beverage cups and lids, as well as bags thinner than 50 microns, including paper.
Exceptions will apply for products intended for export, items made from recycled materials, and essential uses such as medical bags or thin food wrapping.
The phased approach began in 2024 with a ban on all single-use shopping bags, as part of the UAE’s broader sustainability strategy.
Tax Compliance
Also entering into force as of January 2026, Federal Decree-Law No. (17) of 2025 amends the UAE Tax Procedures Law, setting a five-year limit for requesting refunds of tax credit balances and providing clarity on limitation periods for tax audits.
It also allows the Federal Tax Authority (FTA) to issue binding guidance to taxpayers, ensuring uniform application of tax legislation.
Transitional provisions enable taxpayers with expiring credit balances to submit claims up to a year after the law comes into effect.
Separately, amendments to the Value-Added Tax (VAT) Law under Federal Decree-Law No. (16) of 2025 will simplify compliance and reduce administrative burdens.
Taxpayers applying the reverse charge mechanism will no longer need to issue self-invoices but must retain supporting documentation.
The changes also introduce a five-year limit for reclaiming excess VAT and strengthen measures against tax evasion.
