Saudi Arabia to roll out four-tier sugar tax on drinks from Jan 1

Riyadh: Saudi Arabia’s Zakat, Tax and Customs Authority (ZATCA) has approved amendments to the executive regulations of the excise tax, introducing a sugar-content-based levy on sweetened beverages from January 1, 2026.

The revised framework replaces the current flat 50 percent excise duty with a four-tier methodology that calculates tax according to the total sugar content per 100 millilitres of locally produced ready-to-drink beverages.

Four-tier excise tax methodology:

• Tier 1 (Zero tax): Beverages sweetened only with artificial sweeteners and containing no added sugar
• Tier 2 (Zero tax): Low-sugar sweetened beverages containing less than 5g of sugar per 100ml
• Tier 3 (SAR 0.79 per litre): Sweetened beverages with sugar content ranging from 5g to 7.99g per 100ml
• Tier 4 (SAR 1.09 per litre): Sweetened beverages containing 8g or more of sugar per 100ml

ZATCA said the revised structure covers all sweetened beverages produced for consumption, including ready-to-drink products and other forms that can be converted into drinks.

The authority said the measure aims to curb sugar intake, incentivise lower-sugar formulations and align excise policy with international public health standards.

The amendments follow a decision by the Financial and Economic Cooperation Committee of the Gulf Cooperation Council (GCC) to adopt a graduated approach to excise taxation on sweetened beverages.

Regional outlook

Analysts expect Saudi Arabia’s decision to influence excise tax policy across the Gulf. Bahrain and Oman are seen as the most likely to adopt similar sugar-linked tax systems, while Kuwait is expected to face broader public debate before introducing comparable measures.

The United Arab Emirates (UAE) has already announced that it will implement a sugar-content-based excise tax on sweetened beverages from January 1, 2026, replacing its long-standing flat 50 per cent levy.