Saudi to begin imposing tobacco, soft drinks tax in June

Saudi Arabia has announced that selective taxes including those imposed on tobacco products and soft drinks will be implemented from June 10, according to a local report.

The date was revealed by the kingdom’s General Authority of Zakat and Tax, local daily Saudi Gazette reported. The authority also confirmed that value added tax (VAT) will be imposed from January 1, 2018, the report stated.

The GCC General Secretariat decided during a meeting on on May 23 to impose selective taxes of 100 per cent on tobacco products and energy drinks and a 50 per cent tax on soft drinks.

Read more: GCC value added and selective taxes come into force

The Zakat Authority, which will collect selective taxes and VAT, is also tasked with overseeing implementation of the tax regime and ensuring that there is no tax evasion.

If registered entities fail to present a tax declaration to the authority, they will face fines ranging between 5 per cent to 25 per cent of the tax value, the report said.

Meanwhile those who withhold information, violate regulations, or obstruct the Zakat authority’s employees from carrying out their duties, will be fined up to SAR50,000.

The authority also affirmed that entities that import or produce commodities liable to selective tax and don’t register the required information will be considered tax evaders.

The board of the General Authority of Zakat and Tax is scheduled to meet on Wednesday to issue and announce the executive bylaws, the report added.

Saudi’s government estimates that its new selective tax will raise between SAR8bn and SAR10bn annually, media reports quoted the General Authority of Zakat and Tax as previously stating.

Last week, it was reported that the UAE will implement the selective tax from the fourth quarter of this year.

Obaid Al Tayer, minister of state for financial affairs was previously quoted as saying the tax on tobacco could generate Dhs2bn a year.

Read more: UAE to introduce 100% tax on tobacco, energy drinks in Q4 – report

In March, Qatar’s only alcohol shop warned customers of price rises suggesting the country’s selective tax may also be applied to other goods.

Read more: Qatar’s only alcohol shop encourages purchases ahead of sin tax

In terms of VAT, most Gulf states have confirmed that they will implement the 5 per cent tax from January 1, 2018.