Saudi Arabia to apply sugar-based excise tax on sweetened beverages from Jan. 1
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The Saudi Zakat, Tax and Customs Authority (ZATCA) will implement a revised methodology for calculating excise tax on sweetened beverages starting Thursday, Jan. 1, replacing the current flat-rate system with a tiered structure based on sugar content.
Under the new system, excise tax will no longer be calculated at a fixed rate of 50 percent of the retail price. Instead, the tax will be determined by the amount of sugar per 100 milliliters of a beverage, with higher rates applied to products containing higher sugar levels. Sugar-free and low-sugar beverages will be subject to lower rates.
The ZATCA Board of Directors has approved amendments to the executive regulations of the Excise Goods Tax Law to introduce the revised calculation method. The authority said the updated approach bases taxation on the total sugar content of sweetened beverages.
According to ZATCA, the new framework divides products into four categories. The first includes beverages sweetened only with artificial sweeteners and containing no added sugar. The second covers low-sugar beverages with less than 5 grams of sugar per 100 milliliters. The third includes medium-sugar beverages containing between 5 and 7.99 grams per 100 milliliters. The fourth category applies to high-sugar beverages with 8 grams or more per 100 milliliters.
The authority said the revised methodology replaces the existing excise tax system, which applies a fixed 50 percent rate to the retail price of sweetened beverages. It clarified that sweetened beverages include any product to which sugar or other sweeteners have been added and that is intended for consumption as a beverage, including ready-to-drink products, concentrates, powders, gels, extracts or other convertible forms.
ZATCA said the revised tax structure is intended to support public health objectives by encouraging lower sugar consumption and motivating producers and importers to offer beverages with reduced sugar content, in line with international practices.
The change follows a decision by the Financial and Economic Cooperation Committee of the Gulf Cooperation Council to amend the mechanism for calculating excise tax on sweetened beverages by adopting a volumetric, tiered system based on sugar concentration.