Saudi Arabia to Roll Out Tiered Sugar Tax on Drinks from Jan 1

Saudi Arabia will implement a new four-tier excise tax system on sweetened beverages starting January 1, replacing the current flat-rate levy, the Zakat, Tax and Customs Authority (ZATCA) announced.

Under the revised framework, excise tax will no longer be calculated as a fixed 50 per cent of the retail price. Instead, the tax will be directly linked to the amount of sugar per 100 millilitres in each beverage, marking a major shift in how sweetened drinks are taxed in the Kingdom.

Four Clear Sugar-Based Categories

The new system classifies sweetened beverages into four distinct tiers based on sugar concentration:

• Tier 1: Drinks containing only artificial sweeteners with no added sugar

• Tier 2: Low-sugar beverages with less than 5 grams of sugar per 100 ml

• Tier 3: Medium-sugar drinks containing 5 to 7.99 grams per 100 ml

• Tier 4: High-sugar beverages with 8 grams or more of sugar per 100 ml

Excise tax will be calculated according to the sugar level within each category, particularly for ready-to-drink beverages.

Wide Scope of Application

ZATCA confirmed that the revised methodology applies to all forms of sweetened beverages, including ready-to-drink products, as well as concentrates, powders, gels, and extracts that can be converted into drinks.

Focus on Public Health

According to the authority, the reform is designed to support public health objectives by discouraging excessive sugar consumption. By directly linking tax rates to sugar content, the policy aims to encourage manufacturers and importers to reduce sugar levels in their products.

Part of a Broader GCC Strategy

ZATCA noted that the move aligns with a decision by the Gulf Cooperation Council’s Financial and Economic Cooperation Committee, which endorsed a volumetric, tiered excise tax system for sweetened beverages across the region. The initiative reflects wider GCC efforts to curb health risks linked to high sugar intake and promote healthier consumer choices.