New exec regs for sugar-based excise tax to take effect on Jan. 1

The Board of Directors of the Zakat, Tax and Customs Authority (ZATCA) approved amendments to certain provisions of the executive regulations of the Excise Tax Law, which will come into effect starting Jan. 1, 2026.

Under these changes, the methodology for calculating excise tax on sweetened beverages was amended, shifting the basis of taxation to the total sugar content per beverage.

This new approach, termed the Tiered Volume-Based Excise Tax Model, will supersede the current fixed rate of 50% of the retail price, introducing a system that calculates tax according to the sugar content per 100 ml of ready-to-drink beverages, ZATCA said in a statement.

The revised methodology will impose excise tax based on the total sugar content per 100 ml of sweetened beverages. This tiered structure will categorize beverages into segments, enhancing clarity on the application of excise tax.

The authority noted that sweetened beverages are defined as a product to which a source of sugar or other sweeteners is added and that is produced for consumption as a drink. This includes beverages in all forms, such as ready-to-drink products, concentrates, powders, gels, extracts, or any other form that can be converted into a beverage.

The new methodology aims to promote public health and encourage reduced sugar consumption. This will be achieved by incentivizing producers and importers to offer consumer beverages with lower total sugar content, in line with international best practices.

Highlights of New Regime

In October, the GCC Financial and Economic Cooperation Committee approved amendments to the excise tax methodology for sweetened beverages, Argaam data showed.