Saudi Arabia has decided to implement a new four-tier sugar tax on sweetened beverages from January 1, 2026, replacing the existing flat-rate excise system with a structure directly linked to sugar content. The move, announced by the Zakat, Tax and Customs Authority (ZATCA), is part of the government’s broader strategy to protect public health by controlling sugar consumption and encouraging healthier beverage choices.
Under the planned framework, excise tax will be calculated based on the total sugar content per 100 millilitres of a sweetened beverage, moving away from the existing 50 percent tax applied to the retail selling price. The change follows the approval of amendments to provisions of the executive regulations of the Excise Goods Tax Law by ZATCA’s board of directors.
The revised methodology introduces a tiered structure that classifies sweetened beverages into four categories:
Excise tax is planned to be calculated volumetrically for ready-to-drink beverages within each tier, based on sugar concentration.
The changes will apply to all forms of sweetened beverages, including ready-to-drink products, concentrates, powders, gels, and extracts that can be converted into beverages, expanding the scope of excise taxation across the sector.
ZATCA said the reform is intended to support public health objectives by encouraging reduced sugar consumption and incentivising manufacturers to reformulate products with lower sugar levels.
The authority noted that the move is based on a decision by the Gulf Cooperation Council’s Financial and Economic Cooperation Committee to adopt a volumetric, tiered excise tax system for sweetened beverages across the region, reflecting broader GCC efforts to address health risks associated with high sugar intake.
Source: Gulf news