Saudi Arabia will implement a revised four-tier methodology for calculating excise tax on sweetened beverages, starting Thursday, 1 January 2026. The Saudi Zakat, Tax and Customs Authority (ZATCA) announced this significant change, which replaces the previous flat 50% excise tax rate. The new system calculates taxes based on the sugar content per 100 milliliters of the beverage, with sugar-free and low-sugar beverages will enjoy lower or zero excise tax, promoting healthier choices among consumers.
A New Framework for Public Health
ZATCA’s Board of Directors recently approved several vital amendments to the executive regulations of the Excise Goods Tax Law. These specific legal changes facilitate a shift where officials calculate the tax based on the total sugar content of drinks.
Furthermore, the authority believes this tiered bracket system better aligns with broader public health objectives and current GCC-wide initiatives.
The revised tax structure officially classifies all sweetened beverages into four distinct categories based on their specific chemical composition. The first category includes drinks using only artificial sweeteners with no added sugar, which enjoy the lowest possible tax rates.
Meanwhile, low-sugar beverages containing less than 5 grams per 100ml fall into the second tier of the new system. Medium-sugar beverages, which contain between 5 and 7.99 grams per 100ml, face higher levies than the lower tiers do.
Finally, any high-sugar beverages containing 8 grams or more per 100ml will trigger the most expensive excise tax bracket.
Encouraging Healthier Manufacturing Standards
ZATCA clarified that this dynamic model fully replaces the old system, which applied a static tax based on retail prices. Nevertheless, the legal definition of a sweetened beverage remains the same and covers concentrates, powders, gels, and ready-to-drink products. The authority explicitly designed this methodology to force manufacturers and importers to reduce the sugar levels in their commercial products.
Because the tax targets sugar concentration rather than price, it promotes healthier consumer choices while supporting international best practices. This significant change follows a collective decision by the Gulf Cooperation Council’s Financial and Economic Cooperation Committee to modernize taxation.
Ultimately, member states now favor this volumetric, tiered excise tax system to improve the general health of all regional citizens.
