The Zakat, Tax, and Customs Authority (Zatca) proposed amendments to theexecutive regulations of the Selective Tax Law (pdf), introducing a sugar-content-based system for calculating the selective tax on sweetened beverages. The draft is open for public consultation on Istitlaa until Thursday, 23 October.

A new sugar-based methodology: The proposed changes would replace the current flat tax rate on sweetened beverages with a tiered system tied to total sugar content per 100 ml. The tax would exempt sugar-free or low-sugar drinks and apply a SAR 1.09 tax per liter for medium and high-sugar products.

Tiered tax rates:

  • Tier 1: Sugar-free, contains only artificial sweeteners — SAR 0 / liter;
  • Tier 2: Low sugar (less than 5 g per 100 ml) — SAR 0 / liter;
  • Tier 3: Medium sugar (5-7.99 g per 100 ml) — SAR 0.79 / liter;
  • Tier 4: High sugar (8 g or more per 100 ml) — SAR 1.09 / liter.

Other selective goods unchanged: Existing tax rates remain at 100% for tobacco products, energy drinks, electronic smoking devices, and liquids used in electronic smoking devices.

Clarity and compliance: The amendments also clarify how the selective tax should be calculated for concentrates and powders based on the sugar content of the final beverage and introduce new registration rules requiring producers and importers to disclose sugar levels and supporting data to Zatca before placing products on the market.

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