Saudi Arabia announced that it will implement a new sugar-based tax on sweetened beverages starting January 2026. The new system replaces the current flat 50% excise tax with a tiered model determined by sugar content per 100 millilitres, in line with GCC efforts to harmonize taxation policies and promote public health.
Saudi Arabia to introduce a sugar-based tax on sweetened drinks from January 2026.
Details of the New Tax System
The new volumetric tax will categorize beverages based on their sugar content. Drinks with higher sugar levels will incur higher taxes, incentivizing manufacturers to reduce sugar in their products.
Proposed Tax Tiers
- Tier 1: Drinks with 0g sugar (artificially sweetened) – 0 SAR per litre
- Tier 2: Drinks with less than 5g sugar – 0.79 SAR per litre
- Tier 3: Drinks with 5–7.99g sugar – 0.79 SAR per litre
- Tier 4: Drinks with 8g sugar or more – 1.09 SAR per litre
Next Steps and Public Consultation
The Zakat, Tax and Customs Authority (ZATCA) has published a draft of the regulatory amendments on the “Istitlaa” public consultation platform. Citizens and stakeholders are invited to provide feedback until October 23, 2025, ensuring transparency and public participation in finalizing the tax framework.
Purpose of the New Framework
The revised system aims to encourage manufacturers to reduce sugar content in beverages, promoting public health and consistency across GCC countries. It also aligns with regional efforts to standardize excise taxation and strengthen economic coordination.
Comparison with Other GCC Countries
Other GCC countries, such as the UAE, already apply sugar-based taxes on beverages. Saudi Arabia’s adoption of this tiered system reflects a regional commitment to public health and unified economic policies.
