Saudi Arabia will impose hefty taxes on tobacco products, sugary soft drinks and energy drinks in the new year.

A 50 percent tax will be levied on soft drinks and a 100 percent tax will be placed on cigarettes and energy drinks as of the second quarter of 2017. The new taxes were first proposed by the Gulf Cooperation Council (GCC) last December, but Saudi Arabia just signed the agreement this month.

The kingdom is also the first GCC member to announce a specific date for implementing the taxes. 

Saudi Arabia's Program 2020 document explains that the kingdom aims to fight obesity and diabetes among its population –especially children – through such taxes.

In addition to these taxes, the kingdom's 2017 budget calls for several other significant changes.

The kingdom's new budget was released in unprecedented detail last week. 

Here's what you should know.

1. The kingdom will implement a general VAT in 2018

Riyadh's skyline Source: WikiMedia

In line with a GCC agreement announced in February, Saudi Arabia will introduce a 5 percent value added tax (VAT) as of the first quarter of 2018. Although the decision was made in February, the timeframe of implementation was unclear until now.

Although the VAT will apply to most products, many food items, health, social services and education will all be exempt.

2. Employers will face higher fees for expat workers

Some media have reported that taxes will be implemented for expats, but this isn't quite the case. Sponsors of foreign workers currently pay a fee equivalent to 200 Saudi riyals ($53.33) per month for each expat employee. This will begin increasing starting in the third quarter of 2017.

By 2020, the total feel will be quadrupled to the equivalent of 800 Saudi riyals per month. A new fee for dependents of expat workers will also come into effect as of July 2017.

Expats will not be charged any income taxes, contrary to some previous reports.

3. The government will continue to curb subsidies

Longstanding subsidies for water, gas and other energy supplies were curbed slightly as part of Saudi Arabia's Vision 2030. This saved the kingdom some 28 billion riyals in 2017.

Moving forward, Riyadh plans to continue phasing out subsidies, aiming to save more than 200 billion riyals by 2020. This will leave Saudis paying significantly more each year to fill their tanks and power their homes.

4. Tax reforms are meant to buck an impending recession

The Saudi economy is dependent on oil Source: Flickr/Day Donaldson

Experts expect the Saudi economy to fall into recession in 2017 for the first time since 1999. 

The kingdom's oil sector growth will continue to slow as austerity measures are implemented. The Saudi economy is predicted to contract by 0.2 percent in real terms next year. In 2016, the economy grew by just 0.8 percent.

Low oil prices have taken their toll on the global economy and Saudi Arabia has been feeling the effects as well. Riyadh's budget deficit reached a record high of $98 billion in 2015. It has been cut to $79 billion in 2016, $8 billion less than initially expected.

At the same time, the kingdom has well over half a trillion dollars in foreign reserves. But as oil prices have remained low and unstable, Saudi Arabia has dug deep into this reservoir. In July, the kingdom burned through $6 billion in reserves.

5. Economic reforms are a major part of Vision 2030

Deputy Crown Prince Mohammed bin Salman Source: Kremlin

Deputy crown prince Mohammed bin Salman unveiled his expansive Vision 2030 reform plan for the kingdom earlier this year. The plan was approved by the Saudi cabinet in June.

Vision 2030 aims to create jobs, implement taxes, cut subsidies and diversify the kingdom's economy. Entertainment, education and other business sectors are the key targets of the reform plan. A five percent share of Saudi Aramco – the world's largest producer of crude oil – will also be sold to investors. This will be the company's first-ever public offering.

While some of the changes have been hailed as positive steps forward, many Saudis have also expressed discontent as austerity measures have taken effect.