In a move aimed at encouraging healthier beverage choices and supporting the drinks industry, the government has decided to remove the 20% Federal Excise Duty (FED) on selected low-sugar hydration beverages under the Finance Bill 2026.
The revised policy applies to mineral water, aerated water, electrolyte beverages, and hydration drinks that contain no more than 5 grams of sugar or artificial sweeteners per 100 milliliters. Previously, these products were subject to a 20% excise duty regardless of their sugar content or nutritional profile.
The amendment was introduced by the Minister for Finance and Revenue and approved through changes to the Federal Excise Act. By creating a distinction between high-sugar and low-sugar beverages, the government is signaling its intention to promote products that support hydration while containing lower levels of sweeteners.
Industry observers believe the tax relief could benefit both manufacturers and consumers. Beverage companies may face lower production costs, while consumers could eventually see more affordable prices for qualifying products. The change may also encourage companies to reformulate existing drinks to meet the new sugar threshold and take advantage of the tax exemption.
Alongside this measure, the government has also withdrawn the Super Tax on exporters through amendments to the Finance Bill 2026. The decision is expected to provide financial relief to export-oriented businesses and strengthen their competitiveness in international markets.
Overall, the latest tax changes reflect an effort to support healthier consumer options while providing targeted relief to key sectors of the economy.