Saudi sets date for 50-100% beverage sin tax next month

30-May-2017 - Last updated on 31-May-2017 at 14:41 GMT

Saudi Arabia will begin to tax energy drinks and carbonated sodas from June 10, making it the first country in the Gulf to fix an implementation date.

The policy, which was agreed on May 23 by the General Secretariat of Gulf Cooperation Council, sets out to impose 100% tax on energy drinks and cigarettes, and a 50% levy on carbonated drinks.

The looming selective levy is part of a raft of tax regime changes across the Gulf, including the implementation of 5% VAT rate across the GCC next January. A soda tax is also expected to be introduced in the UAE in the fourth quarter this year.

“Those who import or produce commodities liable to selective tax and don’t register the required information with the authority will be considered tax evaders,” the Saudi Gazette said in a report. Revenues from the tax are expected to reach SAR7bn (US$1.9bn) in six months.

“If registered people (traders, importers etc.) fail to present a tax declaration to the General Authority of Zakat and Tax, then they will be penalised by a fine ranging between 5-25% of the tax value,” added the General Authority of Zakat and Tax, which will be responsible for collecting VAT.

A recent report by EY predicted that next year’s VAT would add more than US$25bn of revenues each year for GCC countries.