The Zakat, Tax and Customs Authority in the Kingdom of Saudi Arabia announced a significant step aimed at enhancing public health and developing tax policies. Amendments to the executive regulations for selective tax have been approved and will come into effect on January 1, 2026. This decision, following approval by the Authority's Board of Directors, aims to change the mechanism for calculating taxes on sweetened beverages, basing them instead on the total sugar content of the product rather than the previously applied fixed percentage.
Details of the new mechanism and tax brackets
The authority explained that the new methodology will be implemented through a tiered tax system directly linked to the sugar content per 100 ml of beverage. This precise measure aims to incentivize consumers to reduce their sugar intake and encourage manufacturers and importers to reformulate their products to offer lower-sugar options, in line with international best practices that have proven successful in numerous countries worldwide in curbing the consumption of high-calorie drinks.
Context of the decision and the Kingdom's Vision 2030
This decision is not an isolated event, but rather a continuation of the Kingdom's efforts to implement selective taxes, which began in 2017 on goods harmful to health, such as tobacco and energy drinks, and were later expanded in 2019 to include sweetened beverages. This approach is perfectly aligned with the objectives of "Vision 2030," specifically the "Quality of Life" program, which aims to reduce the rates of chronic diseases, obesity, and diabetes. The Kingdom is among the countries that prioritize combating these diseases through preventative legislation.
Expected economic and health impact
This change is expected to transform the local beverage market, pushing manufacturers to innovate and reduce sugar content to avoid higher tax brackets, thus offering consumers healthier alternatives. From a health perspective, global studies indicate that linking taxes to sugar content effectively reduces daily calorie intake per capita, thereby lessening the future burden on the public healthcare system due to a decrease in the incidence of diseases linked to unhealthy diets.
