Saudi Arabia will become the first Gulf Cooperation Council (GCC) country to impose excise tax at 100 percent on tobacco products and energy drinks, and 50 percent on soft drinks, from June 10.
The news comes days after the UAE Federal Tax Authority (FTA) said it will start imposing excise tax on tobacco products, energy drinks and soft drinks, from the fourth quarter.
The Saudi General Authority of Zakat and Tax, the entity responsible for collecting value added tax (VAT) and excise tax, announced the decision on Saturday following ratification of the tax treaties by the General Secretariat of GCC on May 23, according to local media reports.
Al Eqtesadiyah, an Arabic business daily, quoted Zakat Authority officials as saying that the excise tax revenues will reach $1.87 billion (SR7bn) in mere six months.
In the six-nation bloc, the UAE and Saudi Arabia have publicly announced their plans to start implementing VAT from January next year.
Last week, UAE Minister of Finance Sheikh Hamdan Bin Rashid Al Maktoum, reiterated that the country will start imposing VAT from January 1, 2018.
“VAT is being introduced to achieve economic diversification in preparation for the post-oil era,” he said, stating, the tax procedures law will be published soon.
Businesses in the UAE that meet the minimum annual income of $102,180 (AED375,000), validated by their financial records, have to compulsory register under the VAT system from the third quarter 2017, before it becomes mandatory from the last quarter. However, registration is optional for businesses that an annual income of $51,090 (AED187,500) and above.
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