Pakistani Government Abolishes Excise Duty on Low-Sugar Sports Drinks

The Pakistani government has announced a significant development in its tax policy by resolving a long-standing dispute with beverage giants Coca-Cola and Pepsi. As part of the amendments to the Finance Bill 2026, a 20% Federal Excise Duty (FED) on low-sugar sports drinks has been abolished. This move is expected to provide significant relief to the companies operating in the country.

The exemption specifically targets hydration drinks that contain less than 5 grams of sugar per 100 milliliters. This category includes popular products such as Gatorade and Revive, which are now exempt from the excise duty previously imposed on them. This policy change aims to alleviate taxation pressure on beverages that are positioned as healthier alternatives due to their lower sugar content.

Sources indicate that the decision to eliminate the excise duty was influenced by various stakeholders, including the U.S. Embassy, which had previously urged the Pakistani government to address tax and customs issues affecting beverage manufacturers. This appeal highlights the international interest and involvement in local taxation policies, especially concerning major U.S.-based firms like Coca-Cola and Pepsi.

The resolution of this tax dispute marks a pivotal shift in the Pakistani government's approach to taxation on beverages and reflects ongoing efforts to create a more business-friendly environment for multinational companies.

The changes are part of a broader attempt to streamline the fiscal framework and encourage investment by reducing operational costs for companies within the beverage sector.