Saudi Arabia is implementing a 'sin tax' for the first time ever

The kingdom will be first GCC nation to implement the new taxes.

As of June 10, Saudi Arabia will become the first Gulf Cooperation Council (GCC) country to impose a 100 percent excise tax on tobacco products and energy drinks, in addition to a fifty percent tax on soft drinks, Arabian Business reported.

The Saudi General Authority of Zakat and Tax announced the decision on Saturday. 

The news comes a few days after the General Secretariat of GCC ratified the tax treaties on May 23. 

According to the country's Zakat Authority officials, the excise tax revenues are expected to reach between 8 to 10 billion Saudi Riyals ($2.1 - $2.7 billion) within six months. 

"If registered people (traders, importers etc.) fail to present a tax declaration to the General Authority of Zakat and Tax, then they will be penalized by a fine ranging between 5 percent and 25 percent of the tax value," Saudi Gazetter reported. 

Other GCC countries, including the UAE, are set to follow in Saudi Arabia's footsteps but have yet to set tax implementation dates.  

UAE to follow in Saudi's footsteps

The news of Saudi's "sin tax" comes days after the UAE Federal Tax Authority (FTA) said it plans to impose a similar excise in the coming few months. 

According to The National, the authority said that "it will open tax registration in the third quarter of the year for companies that produce, import or store"  tobacco products, soft drinks and energy drinks. 

The authority also said that the tax will be calculated as a percentage of the retail sale prices (RSP). 

Copyright Notice

This website, newsletter, and its content are copyright of Step Platform DMCC - 2021. All rights reserved.

Any redistribution or reproduction of part or all of the contents in any form is prohibited other than the following:

  • You may print or download to a local hard disk extracts for your personal and non-commercial use only
  • You may copy or forward the content to individual third parties for their personal use, but only if you acknowledge the website and newsletter as the source of the material

You may not, except with our express written permission, distribute or commercially exploit the content. Nor may you transmit it or store it in any other website or other form of electronic retrieval system.

You may not, except by clearly referencing or crediting the website and newsletter, share or distribute the content.