28 May 2019
Saudi Arabia: 100% Tax on E-cigarettes and 50% on Sweetened Drinks Introduced
Saudi Arabia has amended excise taxes to include sweetened beverages, electronic smoking appliances, and any liquids used in those products.
The move was approved by the Saudi Arabia’s General Authority of Zakat and Tax (GAZT) on 15 May 2019, as an amendment to existing excise tax regulations. The Implementing Regulations for the Excise Tax Agreement of the States of the Gulf Cooperation Council previously applied 100% tax on tobacco, 50% on soft drinks and 100% on energy drinks. Under the new amendments to the Implementing Regulations, sweetened beverages will also be taxed at 50%, and electronic smoking appliances and tools at 100%. The new tax became effective on 18 May 2019.
Importers and exporters should note that, in addition to affecting newly excisable goods imported or produced on or after the effective date, any excisable stock held under customs or excise tax suspension or by a government entity at the effective date will also be subjected to excise tax if the total retail value of the excisable stock exceeds SAR60,000 (US$16,000), according to an analysis of the changes by accountancy consultant, EY.
Affected businesses will also be required to determine the value of the excise tax payable, and to file the relevant declaration within 45 days from the effective date. Any persons importing, producing, or holding excisable goods under customs or excise duty suspension arrangements will be required to apply for registration to the GAZT within 30 days from the effective date. The GAZT will review the registration application within 14 days of its submission date.
Furthermore, according to EY, the proposed changes include the launch of a digital tax stamp (DTS) scheme for excisable goods. The DTS scheme will require paper tax stamps and digital codes on the goods to confirm and ensure that all due excise tax has been paid. This scheme will be initially applicable to all tobacco products offered for consumption in Saudi Arabia from 23 August 2019, and gradually phased to other excisable products.