Saudi Arabia set to impose selective tax in Q2 2017

Saudi Arabia will impose selective taxes on tobacco, soft, and energy drinks during the second quarter of this year, said Tareq bin Abdulrahman Al-Sadhan, director of the kingdom’s General Authority of Zakat and Tax (GAZT).

The exact date of implementing the selective tax will be announced as soon as the regulatory procedures are completed, he said in a statement on the GAZT website.

Local media reported earlier in March that the kingdom’s plans to introduce selective taxes from April 1 may be delayed.

The Saudi cabinet agreed last month to implement the unified selective tax agreement that was previously approved by the six member states of the Gulf Cooperation Council (GCC).

A tax of 100 percent will be levied on tobacco and byproducts, as well as energy beverages, while a 50 percent tax will be applied to soft drinks.

The GCC is also planning to levy a 5 percent value added tax by January 2018 in a region that has long enjoyed tax-free and heavily subsidized existence.

In Saudi Arabia, a royal decree has already been prepared for the imminent VAT, which will exempt basic food and other consumer items such as medicines and medical supplies.