The Zakat, Tax and Customs Authority in the Kingdom of Saudi Arabia began today (Thursday) January 1, 2026, to implement the new amendments to the provisions of the executive regulations of the Selective Tax System, which represent a fundamental shift in the way sweetened beverages are dealt with.
These significant amendments aim to improve the mechanism for calculating taxes on sweetened beverages, moving from the previous system, which relied on a fixed percentage of the selling price, to a more precise methodology that directly considers the total sugar content of the product. This step is part of ongoing efforts to modernize the tax system in a way that serves national health and economic objectives.
Details of the new mechanism
Under the new system, the tax will be calculated using a tiered system linked to the sugar content per 100 ml of the beverage. This methodology replaces the previous system, which imposed a 50% tax on the retail price of the taxable beverage, regardless of its nutritional content. This tiered system aims to achieve tax fairness and incentivize companies to improve the quality of their products.
Historical context and health objectives
This step comes as a continuation of the Kingdom's efforts to implement the unified selective tax agreement of the Gulf Cooperation Council (GCC) countries. Saudi Arabia first applied the selective tax in 2017 to goods with health risks, such as tobacco, energy drinks, and soft drinks, and then expanded it to include sweetened beverages in late 2019. This new amendment aligns with the objectives of "Vision 2030" and the Quality of Life Program, which prioritizes the public health of citizens and residents.
This decision is expected to contribute effectively to combating chronic non-communicable diseases, such as obesity, diabetes, and tooth decay, which place a significant burden on the healthcare sector. By linking the tax to sugar consumption, consumers will be encouraged to make healthier choices and reduce their daily sugar intake.
Economic and industrial impacts
On the economic and industrial level, this decision is expected to push manufacturers and importers to reformulate their products to reduce sugar content in order to avoid higher tax brackets, thus enhancing competitiveness in providing products with better nutritional value that comply with approved international standards.
In this context, sweetened beverages refer to any product to which a source of sugar or other sweeteners has been added, which is produced for consumption as a beverage. This includes ready-to-drink beverages, concentrates, powders, gels, extracts, or any other form that can be converted into a beverage.
