Saudi Arabia imposes Excise Tax at 100% on tobacco products, energy drinks, e-cigarette devices and their liquids, while sweetened beverages are taxed at a fixed amount per liter that varies with their total sugar content, under the amendments to the Implementing Regulations of the Excise Tax Law effective from 1/1/2026.
Excisable Goods and Their Rates
The Implementing Regulations of the Excise Tax Law, as amended by ZATCA Board of Directors Resolution No. (06-06-25) effective from 1/1/2026, set the following excise rates: a rate of 100% applies to tobacco products, a rate of 100% applies to energy drinks, a rate of 100% applies to electronic smoking devices and tools and the like, and a rate of 100% applies to the liquids used in those devices.
Tax on Sweetened Beverages by Sugar Tier
Following the amendment, carbonated soft drinks are no longer a standalone excisable category; they are instead merged into the sweetened beverages classification, which is divided into four tiers by total sugar content: Tier One, sugar-free and containing only artificial sweeteners; Tier Two, low sugar (less than 5 grams per 100 ml); Tier Three, medium sugar (5 to 7.99 grams per 100 ml); and Tier Four, high sugar (8 grams or more per 100 ml). The amended Regulations set the tax due on each tier as a fixed amount per liter rather than a percentage: SAR 0 per liter for Tiers One and Two, SAR 0.79 per liter for Tier Three, and SAR 1.09 per liter for Tier Four.
Calculating and Paying the Tax
The tax due on tobacco products, energy drinks, and e-cigarette devices and liquids is calculated by applying the tax rate to the total sugar content or to the tax base, depending on the good; the tax on sweetened beverages is calculated by applying the applicable tier rate to the number of liters released for consumption within that tier. Where such goods are released for consumption as concentrates, powders, gel or extracts, the tax is instead calculated based on the total sugar content of the final ready-to-drink beverage after dilution.
An importer releasing excisable goods for consumption must declare the tax due according to the applicable calculation method. Tax periods are tied to the state's fiscal year, with each period spanning two calendar months, and the tax must be paid before the end of the last day of the month following the end of that period.
Illustrative Example
If a business releases 1,000 liters of a sweetened beverage classified in Tier Four (high sugar) for consumption, the tax due is calculated as follows: 1,000 liters x SAR 1.09 = SAR 1,090. If the same beverage were instead classified in Tier Two (low sugar), the tax due on it would be SAR 0. If the same quantity were tobacco products instead of the sweetened beverage, the tax would be calculated as 100% of the good's tax base, not on the basis of liters.
Legal References
- Amendments to the Implementing Regulations of the Excise Tax Law (2025) — Article Two (definition of excisable goods and sweetened beverage tiers), Article Three (tax rates), Article Four (calculating the tax) and Article Sixteen (tax returns).
For questions about your specific situation, you can ask the Saudi Arabia Tax & Legislation Helper on Helpers, or consult a licensed chartered accountant.