Starting 1 January 2026, Saudi Arabia will shift from a flat-rate excise on sweetened drinks to a new tiered, sugar-content based tax — a move aimed at curbing sugar consumption and promoting public health while pushing beverage makers toward healthier formulations.

New tax bands will be based on sugar per 100ml and affect pricing and product formulation.

What’s changing: from flat 50% to sugar-based tax

Previously, a flat 50% selective tax applied to many sweetened beverages. From January 1, 2026, Saudi Arabia  in alignment with a GCC decision will adopt a volumetric, tiered tax assessed according to the total amount of sugar per 100 milliliters in ready-to-drink beverages.

How the new tiered sugar tax works

The new approach assigns drinks to tax bands determined by sugar grams per 100 ml. Products with higher sugar concentration will face higher per-litre excise amounts, while low or zero-sugar drinks may face reduced or no tax — creating a financial incentive for reformulation and healthier choices.

Example tier structure (indicative)

• Tier 1: 0g sugar per 100ml (artificially sweetened) — minimal/zero tax per litre.

• Tier 2: < 5g sugar per 100ml — lower tax per litre.

• Tier 3: 5g–7.99g sugar per 100ml — moderate tax per litre.

• Tier 4: ≥ 8g sugar per 100ml — highest tax per litre (top band).

Why the change: public health and industry innovation

Minister Bandar Alkhorayef said the change was a negotiated outcome between the Ministry of Finance, the Zakat, Tax and Customs Authority (ZATCA), and the Ministry of Health — intended to balance public health goals with industrial innovation. The policy seeks to reduce sugar consumption and encourage manufacturers to reformulate products with less sugar.

Scope: what beverages are affected

The tax applies broadly to any product to which sugar, artificial sweeteners, or other sweeteners have been added and which is produced for consumption as a beverage. This covers ready-to-drink products as well as concentrates, powders, gels, extracts or any form convertible into a drink.

GCC coordination and regional impact

The decision reflects a GCC-level coordination to harmonize selective tax methodology on sweetened beverages. Regional alignment is expected to affect supply chains, import pricing, and cross-border trade in beverage products across Gulf states.

Implications for consumers and industry

Consumers can expect relatively higher prices for high-sugar drinks and greater availability of low-sugar alternatives. Beverage producers and importers will be incentivised to reduce sugar content to qualify for lower tax tiers and remain competitively priced.

Conclusion

The shift to a sugar-content based selective tax marks a strategic move by Saudi Arabia to protect public health while encouraging industry innovation. Stakeholders — manufacturers, importers and consumers — should prepare for reformulations, price adjustments, and an evolving beverage market across the Kingdom and the GCC.