Cigarettes and Soda to be Taxed in Saudi Arabia

February 22, 2017 Taxation in Saudi Arabia

Cigarettes in Saudi ArabiaRIYADH – Saudi Arabia is taking steps to raise revenues which are not reliant on oil, with cigarettes and soft drinks set in the sights of the tax authorities.

On February 20th, the Council of Ministers of Saudi Arabia granted permission to the national Ministry of Finance to set a date for the implementation of selective taxes on cigarettes and soft drinks.

The new taxes are part of an agreement made by all the national of the Gulf Cooperative Council in 2015 to begin implementing a uniform tax system across the nations.

The tax measure was approved in Saudi Arabia in late 2016.

Saudi Arabia is the first country in the GCC to have gone so far as to allow their Ministry of Finance to set a date for the implementation of the selective taxes.

The taxes in question will see a 100 percent charge added to the sale of cigarettes and tobacco products, along with a 100 percent tax on the sale of energy drinks, and a further 50 percent tax on the sale of sugary soft drinks which do not fall under the classification of an energy drinks.

The government has said that the taxes are aimed at promoting healthier lifestyles by penalizing the use of harmful substances, however, the taxes are also aimed at raising revenues to compensate for the loss in income that the government has seen after the fall of oil prices around the world.