Amendment to the sugar-sweetened beverage tax in Saudi Arabia 2026
The Zakat, Tax and Customs Authority in the Kingdom of Saudi Arabia announced a significant step aimed at promoting public health: the implementation of amendments to the executive regulations of the selective tax, effective January 1, 2026. This decision, following its official approval by the Authority's Board of Directors, marks a new phase in addressing products with potential health risks.
Details of the new methodology for calculating the tax
The new amendments aim to fundamentally change the mechanism for calculating taxes on sweetened beverages. Instead of relying on the current fixed rate, a more precise methodology will be adopted, based on the total sugar content of the product. The authority explained that this methodology will be implemented through tiered tax brackets linked to the sugar level per 100 ml of the beverage.
This gradual approach is directly aimed at motivating consumers to reduce their sugar consumption, and encouraging manufacturers and importers to reformulate their products to offer options with lower sugar content, thereby reducing their tax burden and benefiting the consumer.
Historical background: Selective tax in Saudi Arabia
This decision was not made on a whim, but rather as a continuation of a process that began in mid-2017 when Saudi Arabia first implemented the selective tax. Initially, it applied to soft drinks at a rate of 50%, and to energy drinks, tobacco, and its derivatives at 100%. In December 2019, the scope was expanded to include sweetened beverages at a rate of 50%.
These taxes are part of the unified selective tax agreement for the Gulf Cooperation Council countries, and are imposed on goods that are classified as having harmful effects on public health or the environment.
Health dimensions and their alignment with Vision 2030
The new decision is fully aligned with the objectives of Saudi Vision 2030, specifically the Quality of Life Program, which aims to promote a healthy lifestyle for citizens and residents. Like many countries worldwide, the Kingdom faces health challenges related to high rates of obesity and type 2 diabetes, a significant portion of which is linked to the consumption of sugary drinks.
By linking the tax to the quantity of sugar, the concerned authorities seek to reduce the burden on the health sector in the future, as global studies indicate that fiscal policies are among the most effective means of reducing the consumption of harmful goods.
Compliance with international standards
The Authority confirmed that the amendments are in line with international best practices in this field. The World Health Organization (WHO) recommends taxing sweetened beverages as an effective way to reduce free sugar consumption. Many developed countries have implemented similar models based on a tiered tax system that categorizes sugar content, leading to positive results where manufacturers reduce the sugar content in their products to avoid higher tax brackets. The Authority hopes to achieve this in the Saudi market by 2026.
