Saudi Arabia Introduces New 4-Tier Excise Tax on Sweetened Drinks Beginning January 1

Saudi Arabia Introduces New 4-Tier Excise Tax on Sweetened Drinks Beginning January 1

The Saudi Zakat, Tax and Customs Authority (ZATCA) will introduce a brand new four-tier excise tax system for sweetened drinks beginning Wednesday, January 1. This new system replaces the present flat 50% excise tax and as an alternative calculates tax primarily based on the quantity of sugar per 100 milliliters of the beverage.

Drinks shall be taxed based on their sugar content material: extra sugar, increased tax; much less or no sugar, decrease or no tax. This measure goals to reinforce public well being by lowering sugar consumption, in step with well being packages all through the GCC.

Accredited Adjustments to Excise Tax Rules

How the New Tiered Tax System Works

ZATCA mentioned that the brand new excise tax is predicated on a tiered bracket system that figures out how a lot tax to cost primarily based on how a lot sugar is in 100 ml of a ready-to-drink sweetened drink.

The 4 tax brackets are

➤ First bracket: Drinks sweetened solely with synthetic sweeteners and no added sugar.

➤ Second bracket: Low-sugar drinks containing lower than 5 grams of sugar per 100 ml.

➤ Third bracket: Medium-sugar drinks with 5 to 7.99 grams of sugar per 100 ml.

➤ Fourth bracket: Excessive-sugar drinks with 8 grams or extra of sugar per 100 ml.

What Counts as a Sweetened Beverage?

ZATCA made it clear that any product meant to be used as a drink that comprises added sugar or sweeteners is taken into account a sweetened beverage. All kinds are coated by this:

🔘 Prepared-to-drink drinks

🔘 Concentrates

🔘 Powders

🔘 Gels

🔘 Extracts

Public Well being and GCC Alignment

The authority harassed that the brand new sugar-based excise tax is designed to advertise more healthy decisions and encourage producers and importers to scale back sugar ranges of their merchandise. This method follows worldwide finest practices and helps public well being targets.

The brand new tax system is predicated on a call by the GCC Monetary and Financial Cooperation Committee, which agreed to maneuver towards a volumetric, tiered excise tax system primarily based on sugar focus throughout the area.

Saudi Arabia Introduces New 4-Tier Excise Tax on Sweetened Drinks Beginning January 1