An overview of the new tiered
tax model for sweetened beverages, effective January 1, 2026.
What's
Changing?
Saudi Arabia is transitioning from a flat tax on sweetened
beverages to a more nuanced, tiered system based on sugar content. This policy
shift is designed to encourage healthier product formulations and consumer
choices.
·
Old System (2019–2025): A 50% flat tax was applied to all sweetened
beverages.
·
New System (Effective 1 January
2026): A tiered tax model based on the grams of sugar
per 100 ml of the beverage.
2026
Tax Tiers (Per Litre)
The new structure directly links the tax rate to the sugar
content, creating clear financial incentives for reducing sugar.
|
Sugar per 100 ml |
Tax Rate (per litre) |
|
Less than 5.0 g |
Tax-Exempt |
|
5.0 g - 7.99 g |
SAR 0.79 / litre |
|
8.0 g or more |
SAR 1.09 / litre |
|
|
|
Why
the New Sugar Tax?
The government's objectives extend beyond fiscal policy,
focusing on public health and industry alignment.
·
Promote Healthier Consumer
Choices: Discourage excessive sugar intake and support
better lifestyle outcomes by making high-sugar drinks more expensive.
·
Push Manufacturers to
Reformulate: Create a competitive advantage for brands that
lower the sugar content in their products, as a lower tax bracket translates to
better pricing.
·
Align with GCC & Global
Standards: Harmonize with regional and global public
health strategies aimed at combating non-communicable diseases.
Impact on Stakeholders
|
Consumers |
Businesses & Manufacturers |
Retailers & Distributors |
Finance, Tax & Compliance Teams |
|
Healthier
drinks may become cheaper or maintain stable prices. High-sugar
drinks will become more expensive. Expect
a wider variety of low-sugar and sugar-free beverage options. |
Must
audit sugar content for every Stock Keeping Unit (SKU). Recalculate
pricing structures and update product labels. Prepare
for compliance filing with the Zakat, Tax and Customs Authority (ZATCA). Reformulate
products to avoid higher tax tiers and remain competitive. |
Implement
price restructuring across beverage categories. Adjust
shelf placement to prioritize and promote low-sugar options. Renegotiate
supplier contracts based on new tax implications. |
Conduct
SKU-level tax mapping to ensure accurate calculations. Obtain
sugar content certification for all relevant products. Revise
cost and margin modeling to reflect the new tax structure. Ensure
filing processes are aligned with ZATCA requirements. |
Timeline
& Next Steps
Effective
Date: 1 January 2026
Current
Status: The policy is in a public consultation phase.
Immediate
Action Required: Businesses are advised to
begin assessments, product reformulation, and labeling updates now to prepare
for the transition.
"Saudi Arabia’s new sugar tax is not just a fiscal policy — it is a public health transformation. Brands that innovate early and shift toward healthier formulations will lead the next wave of growth in the beverage sector."
Disclaimer: This blog is shared for information purposes only. The writer is not responsible for any loss or consequences arising from the use of this information.
© Tasleem Faraz Minhas
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