Saudi Arabia is set to introduce a fundamental change to how excise tax is calculated on sweetened beverages, replacing the current flat-rate system with a graduated, sugar-based methodology from the start of 2026.
The Board of Directors of the Zakat, Tax and Customs Authority approved amendments to certain provisions of the Executive Regulations of the Excise Tax Law.
The revised regulations will enter into force on January 1, 2026.
Saudi sugar tax
ZATCA said the amended methodology for calculating excise tax on sweetened beverages will be based on graduated tiers determined by the total sugar content per 100 millilitres of each ready-to-drink beverage falling within a specific tier.
This approach replaces the existing methodology, which applies excise tax at a fixed rate of 50 per cent of the retail selling price of taxable sweetened beverages.
Under the regulations, sweetened beverages are defined as any product to which sugar or other sweeteners are added and that is produced for consumption as a beverage. This includes beverages in all forms, such as ready-to-drink products, concentrates, powders, gels, extracts, or any other form that can be converted into a beverage.
ZATCA said the new methodology aims to enhance public health and reduce sugar consumption by incentivising producers and importers to offer beverages with lower sugar content, in line with international best practices.
The Authority indicated that linking excise tax levels directly to total sugar content is intended to encourage reformulation and provide consumers with healthier beverage options.
The implementation of the revised methodology follows a decision by the Financial and Economic Cooperation Committee of the Gulf Cooperation Council to adopt a graduated volumetric approach for calculating excise tax on sweetened beverages based on total sugar content across GCC member states.
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